:max_bytes(150000):strip_icc()/GettyImages-2241924125-1e86565f84514053ae6e95f814d6726b.jpg "Silver Hits Record High with 100% Price Increase This Year, Far Outpacing Gold")
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Key Takeaways
- Silver prices rose to record highs for the second consecutive trading day on Monday, driven by tight supply and growing investor demand.
- Deutsche Bank expects exchange-traded funds’ silver holdings to hit a record high next year as rate cuts boost demand on Wall Street.
The price of silver rose to an all-time high on Monday, boosted by tight supply and expectations for future interest rate cuts.
Silver futures rose more than 3% to surpass $59 per troy ounce for the first time today, extending a run that saw the precious metal close at a record last Friday. With Monday’s gains, silver prices have doubled since the start of the year, outpacing gold, which is up about 60% year-to-date.
Silver’s rally has been driven by limited supply and rising investor demand. The cost to lease silver—the preferred way to acquire the metal for industrial uses—rose to its highest since 2002 this year, indicating an extraordinary shortage, according to a recent Deutsche Bank report. The firm’s analysts predict that the supply of silver available for industrial use is currently its tightest on record.
Why This Is Important
The price of silver has surged this year amid growing demand from investors seeking safe havens. The rally in silver and gold, which is also favored for its safety, could reflect anxiety about the economic outlook and recent stock market weakness.
Investors seek silver exposure for both its safe haven attributes and its real-world uses. The economic uncertainty that has fueled this year’s historic gold rally is likely also buoying silver. The metal’s also supported by expectations that the Federal Reserve will cut interest rates next month, increasing liquidity in financial markets and raising the appeal of non-yielding assets such as gold and silver.
Deutsche Bank expects demand from investors to grow next year, further diminishing industrial supply. They expect exchange-traded funds to hold about 1.1 billion troy ounces of silver by the end of 2026, surpassing a record high set in 2021.
Investors could also be buying silver in anticipation of demand surging amid the global push toward green energy. Silver is used in solar energy technology and electric vehicle batteries, which are both expected to be in high demand for the foreseeable future.
Deutsche Bank forecasts silver prices will average about $55 an ounce next year, up from about $38 so far this year. Though prices could disappoint if the Fed, concerned that inflation is accelerating above its 2% target, lowers interest rates less than expected.
