Silver prices are going crazy: This is what’s fueling the rally

It all began with distrust. The Hunt brothers — Lamar (who coined the name Super Bowl for the NFL championship), Nelson, and Herbert — heirs to a vast oil fortune, inherited a deep suspicion instilled by the family patriarch toward paper money and the U.S. government. His guiding principle was to invest only in tangible assets: oil, real estate, and precious metals. And that is exactly what they did.

Nelson — known as Bunker — the most imposing figure in the clan, whose immense fortune had been diminished by Colonel Gaddafi’s expropriation of his Libyan oil fields in 1969, turned that skepticism into a speculative bet focused on a single asset: silver. Determined to shield their wealth, the magnate and his relatives amassed around 200 million ounces of the white metal between 1973 and 1979 — roughly a third of global production at the time — driving silver prices to a historic high of $50 an ounce in early 1980.

But the market quickly crashed. Prices plunged to barely $10 an ounce within months, dragging the Hunts into bankruptcy. It would take 45 years for that record high to be surpassed. Today, silver has climbed above $74 an ounce, gaining more than 150% in less than a year.

The initial surge is partly explained by soaring gold prices, which repeatedly broke records in December, reaching around $4,400 an ounce, making silver a more affordable alternative. The key demand for both precious metals, however, stems from a familiar source: lack of confidence. Investors are seeking a safe haven from the loss of cash’s purchasing power (the depreciation of the dollar) and persistent inflation. These concerns are compounded by rising government deficits, which have destabilized sovereign bond markets.

At the institutional level, central banks are responding with large-scale purchases of gold and silver to diversify their reserves and reduce reliance on dollar-denominated assets. This trend is reinforced by strong demand for physical, safe-haven assets from China, where the weakening real estate sector has shifted capital toward metals.

Added to this is steady demand from industry, which accounts for more than half of total consumption. “Technological demand and the energy transition, especially solar power, are underpinning its consumption,” says Soni Kumari, an analyst at the Australia–New Zealand banking group ANZ. “After spending much of the last decade oscillating between being perceived as a monetary metal and an industrial input, silver finally resolved that identity crisis in 2025 by being both at the same time,” adds Olen Hansen, head of commodity strategy at Saxo Bank.

The problem is that there is not enough silver on the market to meet global needs. In 2025, the market will post its fifth consecutive year of deficit, and experts expect the shortfall to continue. Silver supply is inelastic because production cannot be ramped up quickly: most silver is mined as a byproduct of other metals, making supply rigid in the face of price fluctuations.

For example, between 70% and 80% of global silver production comes mainly as a by-product of lead, zinc, copper, or gold mines. In addition, mined silver output has fallen by around 3% this year due to the limited development of new projects. As if that were not enough, this scenario has been compounded by the United States’ designation of silver as a critical mineral, which has further driven up prices.

“The movement of silver to the U.S. has intensified, and there is an expectation that tariffs will be imposed next year,” adds Hasen. Uncertainty over the possible introduction of customs duties has triggered a large movement of the white metal from London — the world’s main trading hub — to the United States, resulting in an unprecedented decline in inventories in the British capital, explains Ewa Manthey, commodities strategist at ING. As a sign of this market dislocation, silver futures contracts (fixed-term commitments) traded on New York’s Comex have been priced higher than those in London for most of the year.

More pressure

This differential has translated into a reduction of physical silver reserves stored in London vaults. “This has put pressure on other regions: reserves linked to the Shanghai Futures Exchange recently reached their lowest level in almost a decade, and a large volume was sent to London to alleviate the pressure,” says Manthey.

This shortage of actual, deliverable silver, combined with strong investment demand, has had a significant impact. As silver is a speculative commodity, financial capital holders don’t want to miss out. Evidence of this is that silver-backed ETFs [exchange-traded funds] have seen their largest inflow in three years.

“However, some of the demand appears to be coming from investors following a ‘me too’ strategy similar to that of gold,” says Neal Brewster, a commodities expert at Elementary Economics, a U.K.-based consultancy. Most of these are retail investors. “Institutional investors, for now, continue to focus on gold as their primary investment vehicle,” adds Hansen.

This situation, combined with a trading volume in silver that is eight to 10 times smaller than that of gold, will continue to generate episodes of volatility, where even a slight correction or rebound in gold can lead to a much more pronounced move in silver, says Hansen. “Silver is often known as ‘gold on steroids’ because its volatility tends to be much higher than that of gold in percentage terms,” adds Manthey from ING. “This makes it more sensitive to economic cycles. While it can outperform gold significantly in a bull market, it can also fall more sharply in a recession,” she emphasizes.

For 2026, all signs point to prices holding steady, especially if the U.S. Federal Reserve continues cutting interest rates. “Monetary policy will be more flexible, which reduces the cost of holding gold and silver positions and tends to weaken the dollar,” explains Kumari. “When the currency falls, investment demand for these metals increases.”

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