Trade of The Day – Silver

Silver extended its historic rally this week, reaching a new all-time high near 64.20 dollars per ounce, supported by exceptional strength in both industrial and investment demand. The metal is now in its fifth consecutive year of a structural supply deficit, according to the World Silver Survey 2025. This remains one of the strongest long-term bullish factors for the market.

• Global mine production is effectively flat at 813 million ounces per year, while recycling has not increased enough to offset rising consumption. This persistent imbalance is a key reason prices continue to trend higher.
• Industrial demand is surging across electronics, photovoltaics, green energy, and advanced manufacturing. The Silver Institute reports that industrial fabrication reached a record in 2025.
• Investor participation has intensified as real yields fall and monetary conditions ease. ETF inflows turned positive, with silver outperforming gold and nearly doubling year-to-date.
• The breakout above 60 dollars per ounce on December 9 triggered additional momentum. Intraday highs on December 11 reached 64.2062 dollars, marking a new historic peak for the metal.
• Analysts are turning increasingly bullish. Bank of America lifted its 12-month target to 65 dollars, while BNP Paribas argued silver could reach 100 dollars per ounce by the end of 2026, driven by ongoing deficits and safe-haven flows.
• Structural constraints limit the market’s ability to respond with new supply. Because most silver is produced as a by-product of lead, zinc, copper, and gold mines, higher prices do not translate into immediate production growth.
• Key risks include potential thrifting in the solar sector, substitution in industrial applications, and a possible decline in investor demand if macro conditions shift, particularly if real rates rise.

The Federal Reserve’s latest decision added visible support to the precious metals complex. A third consecutive 25 basis point rate cut and the announcement of 40 billion dollars per month in T-bill purchases pushed the US dollar lower and boosted both gold and silver. Silver remains the standout performer among precious metals, benefiting from a combination of tightening physical fundamentals, supportive monetary policy, and strong broad-based demand drivers. The market enters 2026 with one of the most compelling bullish setups seen in more than a decade, although volatility is likely as prices test higher ranges.

Silver (D1 interval)

Looking on the silver chart we can see, that the price is almost 50% higher than EMA200, which is very similar to dynamic from 20 October; also the sharp move after November correction is almost 1:1 similiar to the previous one. This dynamic may increase silver volatility, however given the Fed policy change and solid demand, silver is entering Christmas and New Year period in a very optimistic mood.

Source: xStation5

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