Gold touches new record, silver to follow?
Silver starts the year strongly; fundamentals remain strong
While gold has started 2025 with a new record, silver is still a long way off its all-time high.
US president Donald Trump’s new tariff announcements have rattled markets and driven safe haven buying for gold.
Spot gold broke through US$2800 an ounce for the first time, peaking at around US$2815/oz, while futures rose as high as US$2860/oz.
BMO Capital Markets analyst George Heppel expects further volatility in the short term.
“In all the turmoil, the clear commodity beneficiary will be gold, which will not only benefit from higher inflation expectations but also perhaps the potential for a stronger global focus on de-dollarization in response to the USA’s increasingly hawkish foreign policy,” he said on Monday.
What about silver?
Spot silver hit a 2025 high of US$31.61/oz on Sunday and remained above US$31/oz on Tuesday.
However, despite being one of the biggest commodity movers in 2024, silver remains well short of its high of just under US$50/oz reached in 2011.
Saxo head of commodity strategy Ole Hansen pointed out that January had been a good month for silver.
“Silver, supported by the New York squeeze and fresh sellers of the gold-to-silver ratio above 91, helped drive prices higher, with the futures contract retracing 0.618 of the losses seen during the October to December correction,” he said.
“If gold reaches our conservative forecast of US$2900/oz, silver might trade above US$38/oz.”
In mid-January, Sprott Asset Management launched the Sprott Silver Miners & Physical Silver ETF (Nasdaq: SLVR), which it says is the only ETF focused on providing pure-play exposure to silver miners and physical silver.
“Silver is one of the world’s best-known precious metals, and we believe it’s positioned to perform well in today’s market,” Sprott CEO John Ciampaglia said.
“In addition, demand for silver is growing in applications ranging from clean technology and solar energy to the automotive and healthcare industries.
“We believe silver and its miners have significant investment potential, as silver is both a precious metal and an industrial metal critical to new energy.”
Fundamentals strong
According to The Silver Institute, the silver market is likely to remain in deficit in 2025 for the fifth consecutive year.
While this year’s deficit is expected to fall by 19% to 149 million ounces, it is still large by historical standards.
In 2025, global silver demand is expected to remain steady at 1.2 billion ounces, with 3% rises in silver industrial fabrication and physical investment to be offset by a 6% drop in jewellery demand.
Total global silver supply is forecast to grow by 3% this year to an 11-year high of 1.05Boz.
Mine production is tipped to rise by 2% to 844Moz, a seven-year high, due to growth from Chinese sources and the ramp-ups of Gold Fields’ (JSE: GFI) Salares Norte in Chile, Hecla Mining’s (NYSE: HL) Keno Hill in Canada and Aya Gold and Silver’s (TSX: AYA) Zgounder expansion in Morocco.
Silver recycling is forecast to increase by 5% to more than 200Moz, the highest since 2012.
The Silver Institute said concerns about Trump’s tariff policies had fuelled short covering and deliveries of silver and other precious metals into CME warehouses since late 2024.
“Looking ahead, uncertainty over US trade and foreign policy, record-high US equities, and worries about US public debt levels should all reinforce interest in portfolio diversification, which in turn will benefit silver and gold investment,” it said.
“Moreover, even if the pace of US policy rate cuts slows in 2025, the consensus is still that they are coming. Coupled with sticky inflation, this points to potential declines in real rates ahead.”
However, The Silver Institute warned that a potential trade war could dampen investor enthusiasm for industrial metals, including silver.
“This could remain the key drag on silver investment in the coming months, even though silver’s actual industrial demand is expected to remain robust.”