Gold’s Rise Propels Silver Prices to Record Highs
The rise of gold prices is significantly impacting silver, which recently reached unprecedented levels. Silver prices exceeded US$100 per ounce, driven by robust investor and industrial demand. This remarkable surge highlights a shift in market dynamics for precious metals.
Silver Prices Soar Amid Rising Demand
According to Dennis da Silva, a senior portfolio manager, the increase in silver prices stems from strong retail participation and demand for both physical silver and exchange-traded funds (ETFs). Da Silva noted that approximately 55% of silver demand originates from the industrial sector. This includes key applications in solar panels and electric vehicles.
Market Dynamics: Supply and Demand
- Gold Price Increase: Gold prices have surged 77% over the past year and nearly 150% in two years, approaching US$5,000 per ounce.
- Silver Price Surge: Silver prices have increased approximately 200% within the last year.
- Industrial Use of Silver: A significant portion of silver usage is tied to industrial applications, unlike gold which has limited consumption.
Despite fluctuations in precious metals prices due to geopolitical events, the overall trend shows a remarkable growth trajectory. The recent announcement of Kevin Warsh as the new U.S. Federal Reserve chair caused a brief dip in precious metals prices but did not overshadow the prevailing bullish atmosphere.
Tight Supply and Economic Factors
Bipan Rai from BMO Global Asset Management emphasized that tight supply for both gold and silver is reinforcing price increases. The global supply chain faces a significant deficit, resulting in demand outpacing what mining operations can provide. This imbalance is contributing to rising prices across the precious metals market.
Rai also highlighted the influence of a weakening U.S. dollar on precious metal prices. Since President Donald Trump took office, the dollar has been generally declining, further fueling a rise in metals like gold and silver.
The Future Outlook for Silver
Looking ahead, experts remain cautiously optimistic about precious metals. Rai predicted that silver may gain additional momentum from industrial demand, particularly in emerging sectors such as artificial intelligence. However, da Silva cautioned that the current retail enthusiasm for silver might not be sustainable. He anticipates that once retail demand stabilizes, prices may return to the US$75 to US$80 per ounce range.
This scenario underscores the necessity for investors to remain vigilant about market trends and demand fluctuations in the coming years.
