Chart of the day - Silver (26.12.25)

Silver continues to scale new absolute records, testing the $75 per ounce mark and cementing its dominance not only within the commodities complex this year, but across global asset classes. Year-to-date returns for 2025 now approach 160%. In a session characterised by thin holiday liquidity, the metal has gained nearly 4%, though platinum and palladium are posting even more aggressive advances.

While the current rally increasingly exhibits speculative hallmarks, it remains fundamentally anchored in surging demand and a growing realization among investors that physical supply is insufficient. As long as investment demand remained dormant—with ETFs largely divesting silver in recent years—the structural market deficit that has persisted since 2020 was manageable. However, as investors now scramble to secure supply, the price has undergone a violent recovery.

The outlook for 2026 suggests another year of deficit, albeit potentially a narrower one. Demand from the photovoltaic sector is expected to remain robust, though growth may lack the dynamism seen in previous years. While silver recycling is likely to accelerate, mine production remains a bottleneck, exacerbated by output challenges at major copper mines. Given that commissioning a new mine typically requires 15 to 20 years and at least $500 million in investment, supply cannot pivot quickly to meet demand. Currently, the only relief might come from "demand destruction"; with silver prices rising against a backdrop of falling solar panel costs, such a scenario is becoming increasingly plausible. Nevertheless, silver remains essential in growing volumes for the electric vehicle sector and AI-related electronics.

The recovery has been further bolstered by renewed ETF inflows, a weakening dollar, and falling interest rates across Europe and the US. Geopolitical factors have also played a crucial role. While gold has reached historic peaks as a safe-haven asset, silver has not only tracked its peer but nearly doubled its percentage return.

Consequently, the gold-to-silver ratio has compressed toward 60 points, having traded above 100 earlier this year. With the long-term average sitting at 53 points, the current gold price of $4,500 would imply a silver valuation of nearly $85 per ounce. Silver is currently marking its fifth consecutive winning session, with the uptrend accelerating over the last three days as prices breached the upper boundary of the ascending trend channel.