In global financial markets, quietly, silver has become the hot precious metal. Currently, silver is trading at around $59 per ounce, a price appreciation of around 80% since the beginning of the year.
In the last 50 years, the price of silver has spiked three times. In the early 1980s, the Hunt Brothers tried to corner the market for silver. That speculation failed, and the price of silver went down as fast as it went up. Later in 2011, when rating agencies downgraded the sovereign debt of the United States because of the large federal deficit, the price of silver soared yet again. Investors and traders saw silver, like gold, as a safe-haven asset. But just like the early 1980s, the price of silver then dropped precipitously. Today, silver is again moving sharply higher. This time, however, it appears that the price appreciation of this precious metal has some fundamental weight behind it.
Industrial uses for silver are growing. Silver has strong electrical conductivity, more than gold or copper. Silver is increasingly used in electric vehicles, solar panels, and in the infrastructure necessary for the artificial intelligence complex. As EV companies begin to use solid-state batteries, demand for silver could increase dramatically. Today’s lithium-ion electric vehicle batteries use a few ounces of silver. Solid-state EV batteries could use 2 pounds or more of precious metal.
Demand for silver is also rising because of economic growth in India. The country is rapidly becoming an economic powerhouse, with GDP growth in the September quarter exceeding 8%. The 1.46 billion people there are avid consumers of gold and silver. Over 50% of India’s economy is based on the agricultural sector. Agriculture workers often cannot afford gold, but they can afford silver. As the country’s economy expands, demand for silver arguably should rise proportionately.
Silver is also an important financial diversification asset. Today, demand for precious metals, gold and silver especially, is high, in part, because of fears that central governments around the world will debase their currencies in the face of high fiscal deficits. Many American investors are afraid that the federal government will try to reduce the burden of the federal deficit through inflation.
Most immediately, Jerome Powell, the chairman of the Federal Reserve Board, will leave his office in May 2026. Powell has been a good steward of monetary policy. Financial markets are skeptical that the next chair of the board will be as responsible. The market believes that President Donald Trump will select Kevin Hassett, a senior economic adviser. Hassett is a dove on monetary policy. His focus would be on higher economic growth, not on low contained inflation. Precious metals, including silver, are viewed as good hedges against inflation and lax monetary policy.
Globally, silver production has been declining for a decade. Production from silver mines in both Argentina and Peru has been especially weak. Because demand is rising for this precious metal and supply is declining, some analysts believe the price of silver can increase substantially from current levels, perhaps as high as $100 an ounce. Time will tell.
Silver is a commodity. Silver is a volatile asset. Because of its volatility, silver is known as the “devil’s metal.” Trading silver is not for widows and orphans.
James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He publishes a daily Substack on financial markets, politics, and society. He can be followed on X and reached at [email protected].