Significant Upside Potential for Silver

Silver is more volatile than gold as it is a far more speculative precious metal. Gold and silver have long histories as means of exchange, with hundreds of references in the Old and New biblical Testaments. Central banks and governments worldwide own gold as a strategic asset and classify the yellow metal as a foreign exchange reserve. They long ago abandoned silver as a reserve asset because of silver’s high price volatility, opting for gold, a more stable asset.

Monthly historical volatility in the COMEX silver futures market is over 20%, while gold’s monthly price variance metric is around 10.50-%. Silver prices have been rallying, making higher lows and higher highs since the 2020 pandemic-inspired lows. While gold continues to make new record nominal highs, recently reaching over $2,900 per ounce, silver’s price is far below its record 1980 peak at over $50. Silver made a slightly lower high in 2011, just below the $50 per ounce level.

Silver could have significant upside potential in the current market, and now could be the perfect time to add the volatile precious metal to your portfolio.

Silver and gold could have further gains given their inflation-adjusted record highs from 1980

• April COMEX gold reached a new nominal $2,968.50 high on February 11, 2025.
• Nearby COMEX silver futures reached their highest price in twelve years, $35.07, in October 2024, and remained near $33 in March 2025.
• The 1980 inflation-adjusted $875 high in gold was $3,373.33 in January 2025.
• The 1980 inflation-adjusted $50.36 high in silver was $194.15 in January 2025.

Silver has tightened as tariffs loom on the horizon

• Commodity production is local in regions with reserves, while consumption is ubiquitous.
• Mexico is the world’s leading silver producer. Source: Statista
• S. tariffs on Mexico have caused uncertainty about silver moving from the world’s leading producer to the United States.
• London is the hub of international wholesale silver trading, while the U.S. is the home of the most liquid silver futures market.
• The flow of silver from London to the U.S. in anticipation of tariffs has caused silver supplies to tighten.
• Central banks are the lender of last resort in gold as they own the precious metal as a foreign currency reserve asset. There is no lender of last resort in silver. Silver is an industrial precious metal with a long history as a financial and speculative asset.

The technical and fundamental case for higher silver prices

• Silver prices have been in a bullish trend since the 2020 pandemic-inspired low below $12 per ounce.
• Silver reached new medium-term highs in 2020, 2021, and 2024.
• In November 2024, the Silver Institute reported that global industrial silver demand rose to a new record high in 2024, with silver in a physical deficit for the fourth consecutive year.
• Forecasts point to a sizeable silver market deficit in 2025.

Physical bars and coins and futures are the most direct route- ETFs that track silver

• The most direct route for investment for a risk position in silver is through the physical market for bars and coins. However, silver is a bulky metal, creating storage and insurance issues.
• The COMEX silver futures are a highly liquid market with a physical delivery mechanism. Current margin levels for a $5,000 ounce contract worth $165,000 at $33 per ounce are $12,650/$11,500 per contract. A trader or investor can control $165,000 worth of silver for a 7.7% down payment, paying market differences if equity on a long or short position moves below the $11,500 maintenance margin level.
• The iShares Silver Trust (SLV) is the most liquid silver ETF product, holding physical, allocated, and unallocated silver bullion. At $29.34 per share, SLV had over $14.15 billion in assets under management, trades an average of nearly 16.7 million shares daily, and charges a 0.50% management fee.

ETFs that track silver mining shares

• Silver mining shares tend to outperform futures prices on a percentage basis on the upside and underperform during price corrections. Mining shares typically provide leverage to silver prices.
• The GX Silver Miners ETF (SIL) owns a portfolio of the leading senior silver mining companies. At $35.92 per share, SIL had over $1.263 billion in assets under management. SIL trades an average of almost 872,000 shares daily and charges a 0.65% management fee.
• The ETFMG Prime Junior Silver Miners ETF (SILJ) owns a portfolio of the leading junior silver mining and exploration companies. At $10.98 per share, SILJ had over $992.55 million in assets under management. SILJ trades an average of over 2.71 million shares daily and charges a 0.69% management fee.

The long-term quarterly chart highlights that silver could be on the verge of a significant upside break. While gold prices are at nominal new highs, at just over $32.60 per ounce, silver remains far below the 1980 record nominal peak. Silver is a far more speculative precious metal than gold, which could mean a herd of investors and traders will descend on the silver market if the price begins making upside progress. In the current environment, I favor long trading and investment positions in silver.