Gold price fluctuated at a high level, and silver soared.
Recently, the precious metals market has staged a remarkable market.
Spot silver prices soared sharply, once rising by more than 4.5%, broke through the key $36/ounce integer mark, reaching the highest level since February 2012. Although the price fell at the close, it closed at $35.63 per ounce.
Since this year, the cumulative increase in spot silver has reached about 24%, showing a strong upward momentum. Is the time to invest in silver? What will happen in the future?
Silver price increases more than gold
market data shows that the cumulative price of spot gold rose by about 0.6% this week, while the cumulative increase of spot silver exceeded 9%, standing above the $35/ounce mark, during which time it even broke through the $36/ounce mark, the first time since February 2012.
Some analysts said that this differentiation is mainly driven by the logic of gold-silver ratio repair, the unique attributes of silver and market sentiment resonance. In recent times, the gold-silver price ratio has risen to 1 to 100, which is equivalent to 1 ounce of gold that can be exchanged for 100 ounces of silver, which is far higher than the historical average. This extreme ratio implies that either silver is seriously undervalued or gold is seriously overvalued. In addition, from the perspective of silver volatility, since the market size of silver is only one-tenth of gold, it means that a considerable amount of capital inflows often trigger greater fluctuations in the price of silver.
Policy risks push up silver prices
Qu Rui, deputy director of the Research and Development Department of Oriental Jincheng believes that the sharp rise in silver prices may be due to the policy change that Trump announced that it would increase import tariffs on steel and aluminum from 25% to 50%. This move has sparked widespread concern and speculation in the market, and the market expects the U.S. government may take similar tariff measures against other major metals.
The market generally believes that with the adjustment of tariff policies, the global trade pattern is facing reshaping, and the supply chain stability of the metal market has been impacted. In order to avoid possible risks, investors transfer funds to a relatively stable and risk-averse precious metal market. As an important member, silver naturally became the direction of capital inflow. This market behavior caused by changes in macro policies has directly driven the sharp rise in silver prices in the short term.
Multiple factors support the future of silver
Looking forward, what will the silver market go?
Qu Rui believes that the current gold-silver price ratio remains in the range of 85 to 90, far higher than the average level of 40 to 50 in the past 50 years. Historical data show that the gold-silver ratio usually regresses to the mean after a crisis. The current high gold-silver ratio reflects the market's concerns about the industrial attributes of silver, but from multiple dimensions, silver still has a large room for compensation in the future.
However, the market is not smooth. Qu Rui pointed out that Although silver is expected to make up for a sharp increase in the next 1 to 2 years, we still need to pay attention to the suppression of silver industrial demand by US inflation and economic downturn risks. The negative effects of Trump's tariff policy on US inflation and the economy in the early stage will gradually emerge, which may intensify market concerns about the risk of stagflation. Once economic growth slows down, the growth rate of industrial demand is expected to be weakened, putting downward pressure on silver prices.
Source: China News Service, National Express, Securities Times
