Goldman Sachs: Private investment is expected to boost the medium-term outlook for silver, but caution is needed in the short term due to increased volatility and downside risks.

Goldman Sachs stated that under the driving force of private investment inflows, the price of silver is expected to further rise in the medium term, similar to the situation where market expectations of Fed rate cuts have driven gold prices up. However, Goldman Sachs also warned that compared to gold, which benefits from strong demand from central banks around the world, silver may face higher volatility and downside risks in the short term. Data shows that the price of silver broke through the $50 per ounce level last Thursday, and has risen by about 74% since the beginning of the year. Goldman Sachs pointed out that investment demand is the main factor driving the rise in silver prices. According to the bank's analysis, for every additional 1,000 tons of investment buying, the price of silver typically rises by around 1.6%. However, compared to the size of the gold market, the silver market is significantly smaller. The total size of the gold market, including ETF holdings and speculative buying, is around $450 billion, while the silver market is only about $50 billion. Therefore, Goldman Sachs believes that if investors adjust their positions, silver will experience greater volatility and higher downside risk than gold. Goldman Sachs analysts stated: "Due to the poor liquidity of the silver market, which is about one-ninth the size of the gold market, the price of silver may respond more intensely to fund flows, thus amplifying price fluctuations." Goldman Sachs pointed out that the two main risks that may cause a short-term pullback in the price of silver come respectively from the demand side and the supply side. On the demand side, if there is a temporary decline in the inflow of funds into ETFs, it will put pressure on the price of silver. Past data shows that during Fed rate cut cycles, the rate of increase in ETF holdings of silver is usually faster than the average level. On the supply side, the restoration of London Metal Exchange stocks to normal levels may be delayed because some traders are delaying the shipment of silver from the US back to Europe due to the US investigating potential tariffs on key minerals. Furthermore, Goldman Sachs stated that unlike gold, silver lacks the structural support factor of central bank purchases. The bank also downplayed the role of industrial demand for silver in long-term price growth. While silver is widely used in CECEP Solar Energy battery panel manufacturing, Goldman Sachs pointed out that the growth of the global CECEP Solar Energy industry is slowing down, and manufacturers are increasingly replacing silver with cheaper materials such as copper.