Quick overview

---

Unprecedented physical demand and speculative interest in a relatively illiquid market are colliding to drive silver’s record-breaking rally.

James Emmett, CEO of MKS PAMP SA, stated, “There’s immense silver demand in a way that we’ve really not seen before.”

There isn’t usually that much speculation in this market, and short-term players are undoubtedly driving more price movement. Silver achieved its best yearly performance since 1979 last year, when it more than doubled, and this year it has continued an incredible rally by gaining an additional 50%.

The white metal saw its largest intraday increase since the 2008 global financial crisis on Monday as it rose to a record above $117 per ounce. The blistering rally has been supported by global unrest and the so-called debasement trade, in which investors move away from sovereign bonds and currencies in favor of hard assets like precious metals

However, silver has surged more quickly and forcefully than gold, with erratic intraday fluctuations indicating a market overtaken by speculative activity.

Lower liquidity is partly to blame for this. Based on average volumes, the daily value of gold transactions in London is roughly five times that of silver at current prices. Even so, recent price changes have been significantly more drastic than normal.

Fear of missing out has motivated investors to “chase the price action,” according to Emmett. He claimed that some investors used silver as a substitute because they were worried they had missed the gold bandwagon.

This was “a sort of macroeconomic geopolitical play.” With retail and wholesale orders continuing to exceed supply, physical demand is still a major factor influencing silver prices, according to Emmett.