Silver price soars more than 10%, entering "uncharted territory"

[The Financial News]


On the 26th (local time), silver prices once again hit an all-time high. After soaring 150% last year—more than double gold’s 70% gain—silver is continuing to outpace gold’s rise this year with another explosive rally.
According to Consumer News and Business Channel (CNBC), spot silver jumped 5.9% on the day to 109.10 dollars per ounce. March delivery futures surged 13%, climbing to 114.47 dollars.

Silver and gold, despite silver’s nickname as the "poor man’s gold," have somewhat different characteristics. Gold is closer to a precious metal than an industrial raw material, whereas silver plays a much larger role as a core basic material for industry.
Because silver is an indispensable key material for producing semiconductors and batteries, the United States Department of the Interior recently designated it as a critical mineral.
Claudio N. Wewel, a foreign exchange strategist at J. Safra Sarasin Sustainable Asset Management, explained that this critical-mineral designation by the United States Department of the Interior is one of the main drivers behind the recent surge in silver prices.
Wewel said that silver plays a crucial role in the semiconductor industry thanks to its high conductivity, and that concerns over potential supply disruptions amid tariff wars are pushing prices higher.

Wewel also pointed out that silver’s monetary characteristics are another factor behind the price spike.
In an analysis note on the 26th, he stated, "Compared with other commodities, the cost of storing silver is low, and it has long been perceived as a core material for minting coins."
Wewel added that growing demand among low-income and middle-class households in emerging economies to hold silver as a store of value instead of expensive gold is also one of the reasons behind the rise in silver prices.
He said, "Household demand in the Republic of India (India) and China has surged," adding, "In Shanghai, buyers are paying a premium of 10 dollars per ounce over London prices."

Societe Generale’s commodities research team has identified Exchange-Traded Fund (ETF) investment as one of the key drivers of silver’s price rally since last year.
Analysts at Société Générale (SG) explained that since October last year, ETFs have been the main force driving the price movements of gold and silver, sweeping the stage at a time when central bank buying has eased.
In a note released the same day, SG said that since October last year, silver’s price sensitivity to ETF inflows has reached 13.6%. This implies that about half—roughly 65%—of the 130% rise in silver prices since October is attributable to ETF inflows.
Nic Puckrin, co-founder and analyst at Coin Bureau, said that silver and gold have now entered "uncharted territory," a road never traveled before, and noted that macroeconomic uncertainty is fueling the rise in gold and silver prices.
Puckrin also said that retail investors who failed to ride last year’s gold and silver rally are now entering the market driven by a "fear of missing out (FOMO)" on the current upswing.
He further assessed that the boom in Artificial Intelligence (AI) is another major factor behind the surge in silver prices. The AI boom has sent semiconductor demand soaring, which in turn has sharply increased demand for silver as a basic material.
Puckrin stressed that silver is currently facing "unprecedented" demand.

dympna@fnnews.com Song Kyung-jae Reporter