The potential of silver scares many
The silver market has been hovering around $58 per ounce for quite some time, and despite the fact that some volatility is possible, some analysts are confident that silver has good support and growth potential.
Ole Hansen, Head of Commodity Market Strategy at Saxo Bank, notes that the rapid rise in silver prices reflects the widening gap between its physical availability, a favorable macroeconomic environment and a market structure subject to the effect of price "compression".
"If the metal does not become more physically available — and such a scenario looks unlikely in the short term — the revaluation of silver will be the logical answer ", — says Hansen.
Since the beginning of 2025, silver prices have increased by more than 100%, which is the best annual rate since 1979. The main driver of the rally was serious supply chain problems. The year began with a huge influx of silver to America as banks and market participants stockpiled heavily to avoid possible tariffs from President Donald Trump.
Hansen noted that silver's parabolic rally began in October, when physical demand in the London over-the-counter market drained already dwindling stocks. During the month, prices for the supply of physical metal rose to unprecedented levels, indicating a serious shortage of supply.
"This is the type of market where price takes a back seat and securing any available ounces becomes a priority," says Hansen.
In recent weeks, silver supply problems have shifted east to China, where stocks of the metal, controlled by the Shanghai stock exchange, have fallen to their lowest level in a decade.
Meanwhile, stocks in America remain virtually untouched as there is still uncertainty in the market due to the silver duality. On the one hand, it is a monetary metal and is not yet subject to duties, but now that the US government has added it to the list of critically important industrial minerals, it may be taxed.
Looking ahead, Hansen noted that investment demand, including physical demand, is still well supported, as the Fed is expected to continue cutting interest rates, and markets are already taking this into account almost completely.
"The Fed's turn towards low rates has reduced and will continue to reduce the opportunity cost of owning an unprofitable asset like silver. And with the regular rate cuts that the market predicts starting this month and until the end of 2026, the monetary fund is working decisively in favor of such assets," Hansen is confident.
In addition, industrial demand for silver will also provide