Gold Just Had A Historical Run, And Now It's Also Silver's Turn?

The combination of U.S. tariff threats and complex geopolitical factors has led to a surge in safe-haven demand, pushing gold prices to break through $3,000 last Friday and continue their upward trajectory, reaching new heights.

However, some analysts point out that while gold has been in the spotlight, another precious metal, silver, may have even greater potential. Since the beginning of this year, silver futures on the Chicago Mercantile Exchange have risen by more than 16%, surpassing gold's gain of 14.61%.

Historically, the gold-to-silver value ratio has been around 70:1. Currently, the ratio stands at 88:1, indicating that silver is significantly undervalued compared to gold.

On the other hand, silver has stronger industrial applications than gold, which could support a strong performance for silver this year. Statistics show that industrial demand accounts for approximately 50% of global silver demand.

Capital Economics Assistant Economist Ankita Amajuri predicts that silver prices will rise to 35perounceby2025andcontinuetoclimbto35perounceby2025andcontinuetoclimbto38 by the end of 2026, driven by increasing demand from key industries over the next two years.

Silver is a familiar presence in industries such as electronics, photovoltaics, healthcare, and chemicals. Its demand is particularly critical in high-tech sectors like semiconductors, 5G technology, batteries, and electric vehicles.

In addition to investment value and demand considerations, some analysts have highlighted supply constraints. Amajuri expects that silver supply may struggle to keep up with demand growth over the next two years. Since 2019, the silver market has been in a deficit, and prices have doubled during this period.

On the other hand, concerns that silver could be subject to tariffs due to Trump's tariff threats have led to a recent flow of the metal into the U.S. However, unlike gold, which is often transported by air, bulky silver is typically shipped by sea, making its movement slower and more prolonged. This, to some extent, exacerbates the scarcity of silver.

BMO Capital Markets analyst George Heppel expressed concerns that if a silver shortage occurs in London vaults, the current flow of silver could inevitably reverse in the long term, moving from the U.S. back to the U.K. However, due to the slow nature of silver transportation, this could lead to prolonged or disrupted trade.

Citi analyst Max Layton emphasized that the market may be underestimating the impact of Trump's potential tariffs in April. If reciprocal tariffs are implemented, silver could have significant upside potential, as it is unlikely to be exempt from tariffs.

TD Securities Commodity Strategist Daniel Ghali also expressed concerns about tariffs, noting that Canada accounts for 20% of U.S. silver imports. If tariffs are imposed, silver could face greater risks than gold.