silver prices have hit a 45-year high and are outperforming gold. learn more about the reasons for the surge, the investment outlook, and the domestic silver bar shortage.
why silver is at a record high
there has been a clear trend toward safe-haven assets in global financial markets recently. while the price of gold has been reaching new all-time highs, there's another asset that deserves more attention. it's silver.
for the second day in a row, silver futures prices have hit record highs, the first time in 45 years since 1980. at $50 per troy ounce, it may seem insignificant compared to gold's price of $4100 per troy ounce, but it's up a whopping 73 percent this year alone.
in the same time period, gold is up just 50 percent, while the Nasdaq is up 17 percent, which gives you a sense of how steep silver's rise has been.
silver's appeal as the poor man's gold
silver has been nicknamed the poor man's gold. this means that it's an affordable alternative for investors who can't afford to buy gold.
in fact, while the price of an ounce of gold has risen above $4000, increasing the barrier to entry, silver is a relatively inexpensive way to start investing in precious metals. this accessibility has led to a significant increase in interest in silver investing among retail investors.
3 reasons for the silver price surge
the short squeeze
the short squeeze has played a big role in the recent surge, as investors who shorted silver in anticipation of a price drop rushed to buy silver to cut their losses when the price rose.
in short, the buying pressure exploded as they were forced to buy back the silver they had borrowed and sold at high prices.
rising real demand from high-tech industries
the crucial difference between gold and silver is real demand. silver is not just a safe haven asset, but an essential raw material for high-tech industries.
semiconductors, electric vehicle batteries, solar panels, and other key products of the future all use silver as a key ingredient. as the global transition to green energy accelerates, silver demand is structurally increasing.
in particular, a single solar panel contains about 20 grams of silver, and as the solar industry is booming, so is the demand for silver.
potential US tariffs
the possibility of the Trump administration placing tariffs on silver has spurred preemptive demand. the US Geological Survey has proposed to include silver on its list of critical minerals.
if this becomes a reality, silver imports into the US could be subject to tariffs of up to 50 percent. this has sparked a rally in prices as US traders move to secure as much silver as possible before the tariffs are imposed.
where does silver go from here?
wall Street expects the silver bull run to continue for some time. while a short-term correction is possible due to the sharp rise this week, the consensus is that it is still undervalued relative to gold.
some experts are even predicting that silver, currently in the $50s, will surpass $100 per troy ounce. the rationale is that silver is still relatively cheap on a gold-to-silver ratio compared to historical averages.
but there are certainly risks. the silver market is smaller than the gold market, which makes it much more volatile. that means it has the potential to plummet as much as it can soar.
in a recent report, Goldman Sachs pointed out that the formula that gold goes up, silver follows may not hold true in the future - a diagnosis that suggests silver may have greater price volatility and downside risk than gold in the near term.
silver bar shortages in Korea
in Korea, gold and silver bars are supplied by the Korea Mint, the Korea Gold Exchange, and LS MnM, but there have been supply disruptions recently.
the Korea Mint stopped delivering gold bars to banks just before the Chuseok holiday on the 1st of this month. It will resume sales next year, and the Korea Gold Exchange has also notified some banks that it will not be able to supply silver bars from the 20th of this month until the 1st of January next year.
as a result, it has become very difficult to purchase gold and silver bars from commercial banks. smaller products that are less expensive are hard to find, and many banks are selling only about 200 million won for a kilogram of gold bars and 300 to 400 million won for a kilogram of silver bars, and even then, delivery is delayed.
this isn't the first shortage we've seen this year - back in February, the mint stopped selling gold bars for about two months. If the trend toward precious metals continues, buying spot may not be as easy as you think.
frequently asked questions
Q. isn't it too late to start investing in silver?
A. Experts believe that silver is still undervalued relative to gold. however, due to its volatility, we recommend approaching it from a long-term diversification perspective - making it part of your portfolio rather than chasing short-term gains.
Q. which is better, a silver bar or a silver ETF?
A. If you want to hold a physical asset, silver bars are the way to go, while ETFs are the way to go if you value ease of trading and convertibility. silver bars incur fees for storage and resale, but you have the security of owning physical silver. ETFs can be bought and sold in small increments and are easy to trade.
Q. can the price of silver go to $100?
A. Some experts believe it's possible, but it's not a sure thing. A combination of growth in green industries like solar and electric vehicles, increased demand for safe-haven assets, and supply constraints make it a possibility. however, there are many other variables, such as an economic downturn or a stronger dollar.
Q. should I invest in gold or silver?
A. Both have their advantages and disadvantages. gold offers greater stability and relatively low volatility. Silver offers greater upside potential, but also greater risk. your choice depends on your investment appetite and goals, or you may want to allocate between the two assets.
Q. it's hard to buy silver bars in my country, what are my alternatives?
A. In addition to banks, you can purchase silver bars from precious metals specialists. Alternatively, you can use indirect investment products such as silver ETFs or silver futures. just be sure to weigh the pros and cons since they're not physical.
wrapping up
silver's new all-time high is about more than just its price. with its value as a safe haven asset and as a high-tech industrial commodity, silver is now becoming an investment asset in its own right, not just a shadow of gold.
however, it is not without its risks, including high volatility and supply instability. anyone considering investing in silver should do their homework and exercise caution.
what are your thoughts on investing in silver? share your thoughts in the comments, and don't forget to subscribe and like us for more great investing tips. we'll see you next time with more great economic information.