Last week saw spot silver prices jump to their highest level in decades as surging demand for safe-haven assets exacerbated supply constraints in the London bullion market. The precious metal climbed as much as 4% past $51 an ounce on Thursday, the highest since a notorious squeeze orchestrated by the billionaire Hunt brothers in 1980. Although it’s still not getting the coverage of gold that’s made fresh all-time highs almost weekly over recent months. However, silver is extending a surge that has lifted prices more than 70% this year, actually beating gold’s record-breaking rally.
A shortage of freely available silver in the key London market has supported prices, while also pushing up the cost of borrowing the metal sharply. The precious metal has been boosted by the so-called “debasement trade,” with investors flocking to the perceived safety of Bitcoin, gold and silver while pulling away from major currencies, but as we saw with Bitcoin’s 12% plunge, crowded trades can unravel with vengeance when investors stampede for the exits as one. The conversation around debasement, irrespective of its realities, has ignited investors’ enthusiasm towards gold and silver to the point where regression analysis has given way to something more akin to how investors view AI or the technology sector.
However, we’re conscious that the white metal is used around the world as an investment asset, but also has industrial applications, including in solar panels and wind turbines, which collectively account for more than half of the silver sold, with demand set to exceed supply for the fifth consecutive year in 2025. In other words, we see far greater reason to own silver than say Bitcoin in the “debasement basket”.
- We are bullish towards silver and gold, moving forward; resolution on US-China trade may deliver a pullback and a good risk/reward buying opportunity.
