Silver hits record high with 100% price increase this year, far outpacing gold

Silver prices rose to an all-time high on Monday, supported by supply shortages and expectations of future interest rate cuts.

Silver futures rose more than 3% to exceed $59 an ounce for the first time today, continuing the rally that saw the precious metal close at a record high last Friday. With Monday’s gains, silver prices have doubled since the beginning of the year, outpacing gold, which has risen by about 60% since the beginning of the year so far.

Silver’s rise was driven by limited supply and high investor demand. The cost of leasing silver — the preferred way to obtain the metal for industrial uses — rose to its highest levels since 2002 this year, indicating an unusual shortage, according to a recent report from Deutsche Bank. The company’s analysts expect that the supply of silver available for industrial use is currently the lowest it has ever been.

Investors seek exposure to silver for its safe properties and real-world uses. The economic uncertainty that fueled gold’s historic rally this year is likely to boost silver as well. The metal is also supported by expectations that the Federal Reserve will cut interest rates next month, increasing liquidity in financial markets and increasing the attractiveness of non-yielding assets such as gold and silver.

Deutsche Bank expects demand from investors to grow next year, further reducing industrial supply. They expect ETFs to hold about 1.1 billion troy ounces of silver by the end of 2026, surpassing the record set in 2021.

Investors can also buy silver in anticipation of rising demand amid the global trend toward green energy. Silver is used in solar technology and electric vehicle batteries, and demand for both is expected to rise in the foreseeable future.

Deutsche Bank expects silver prices to average about $55 an ounce next year, up from about $38 so far this year. Although prices could disappoint if the Fed, concerned about inflation accelerating above its 2% target, cuts interest rates less than expected.