Silver prices shot to a record high on Wednesday, buoyed by gold's bull run and growing investor demand for hard assets amid persistent geopolitical and economic risks, as well as expectations of U.S. interest rate cuts.
Spot silver hit an all-time high at $49.57 per ounce. Both a precious and industrial metal, silver has gained 70% so far this year, heading for its biggest annual growth since 2010.
Gold, traditionally seen as a store of value during times of instability, surged past the $4,000 an ounce level for the first time on Wednesday, while copper briefly hit a 16-month peak.
"There is also a case at present that many retail traders and others have been using silver as a safe-haven bet as well, which has increased demand and supported the rally in price," said Zain Vawda, analyst at MarketPulse by OANDA.
"Given the structural supply deficit and strong industrial tailwinds, I think silver could reach $55/oz over the next six months or so."
Providing another layer of support to silver is tight liquidity in the London spot market, a major hub for physical trade, after this year's massive outflows to the COMEX-owned warehouses in the U.S. .
These deliveries to the U.S. stocks were at first due to worries that silver could potentially be hit by the U.S. April import tariffs, which the metal avoided.
"This concern resulted in unusually wide differences between the London spot and New York-based CME futures prices, the exchange for physical or EFP market. The premium in New York made it profitable to shift gold and silver to New York," HSBC analyst James Steel said in a note.
Silver's September inclusion on a draft list of U.S. critical minerals has caused another round of speculation over potential tariffs, prompting COMEX stocks to hit a record high last week.
As of the end of September, there were 24,581 metric tons of silver, down 0.3% from August, valued at $36.5 billion in the London vaults, according to the LBMA.
It currently takes 82 ounces of silver to buy an ounce of gold compared with 105 in April, as silver has been catching up with the gold price rally.
"Silver underperformed gold mid-year as the gold-silver ratio went up to 100, exacerbated by trade concerns reflecting silver's role as an industrial metal," Matthew Piggott, director of gold and silver at Metals Focus said.
"We see silver following gold and continuing to climb to breach the $60 level in 2026."
While macroeconomic and financial factors are fuelling investment demand, the outlook for strong demand from technologies such as photovoltaics, electronics, and electric vehicles is adding support to prices.
Similar to gold, silver has also seen a surge in inflows to physically-backed silver exchange-traded funds (ETFs) this year, and enjoyed strong industrial consumption due to higher China solar installations in January-May, Morgan Stanley said in a note.
With room for silver ETF holdings to rise further, silver has an upside but it could start to lag versus gold as the solar demand growth is expected to slow down, it added.
