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What's Behind Silver's Explosive Gains?

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Precious metals have surged this year. Gold has been the best-performing major asset class, rising more than 55%. However, silver, often called the “poor man’s gold,” has outshined it recently, surging almost 75%.

The rally has been driven by concerns about the future of the dollar amid rising fiscal deficits, geopolitical instability, stretched stock-market valuations, and declining interest rates.

Gold’s rise, in particular, has been fueled by relentless central-bank buying. Platinum and palladium have joined the uptrend as strong investor demand spreads across the precious-metals market.

Expectations of interest-rate cuts have further boosted the appeal of non-yielding assets like gold and silver. That’s why the rally paused over the past few weeks as those expectations shifted.

Silver prices reached a new all-time high last week. Earlier last month, silver surpassed a decades-old record set during the infamous Hunt Brothers scandal of 1980. In London, silver traded at a premium over New York due to an unprecedented drop in inventories.

Unlike gold, silver has significant industrial applications, in electronics, solar panels, and medical devices. Thanks to its excellent electrical conductivity, it is used in circuit boards, switches, electric vehicles, and batteries.

Demand has been rising while supply remains stagnant, amplifying price pressures. Investors should keep in mind that silver is more volatile than gold because its market is much smaller. Tariff-related uncertainty has added to this volatility.

India and China remain the largest consumers of silver, both for industrial use and jewelry. In India, many buyers turned to silver during the festival and wedding season, as soaring gold prices have moved beyond reach for many consumers.

To learn more about the iShares Silver Trust ((SLV - Free Report) ), Aberdeen Standard Physical Silver Shares ETF ((SIVR - Free Report) ), Global X Silver Miners ETF ((SIL - Free Report) ) and iShares MSCI Global Silver and Metals Miners ETF ((SLVP - Free Report) ), please watch the short video above.

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