As we explained on Friday, silver is breaking record after record - to the point of stealing the spotlight from gold. And today's rise brings its performance to 78% so far this year.
It is not just demand for safe-haven assets that is driving this movement. First, there is a supply/demand balance to consider. Silver has many industrial applications. And demand is increasing structurally, particularly for electric vehicles and solar panels.
A supply deficit
According to Bank of America, the silver market has been in deficit since 2021. As with all metals needed for the energy transition, there is a gap between rising demand and the difficulty of increasing production. Why? Because it takes about ten years to open a new mine (i.e. from the decision to the first production).
The American bank estimates that silver could reach $65 in 2026, in a macroeconomic context that remains favorable for safe-haven assets (geopolitical tensions, budget deficits, etc.). Demand for silver is expected to peak in 2025, particularly because China has accelerated the installation of solar panels this year. Nevertheless, the market is still expected to remain in deficit in 2026, which should keep upward pressure on prices.
A safe flight for silver
Added to this are liquidity constraints. Earlier this year, the US Department of Commerce launched an investigation under Section 232 of the Trade Expansion Act into critical minerals. This investigation includes silver, platinum, and palladium. Since then, fears of new tariffs have led to a significant decline in reserves in London.
Reserves have been transferred from London to New York (to avoid these potential tariffs). However, this has led to a significant price difference. And now some traders are shipping silver bullion by air—an expensive mode of transport normally reserved for gold—in order to take advantage of the premiums charged in London.
