Silver bull market changes? Analysts warn: Under high prices, industrial demand is shrinking.

In the current sharp rise of precious metals, silver has outperformed gold by far. However, this upward trend is now facing a constraint on the practical level: industries that use this white metal may have started to reduce their purchases. Ole Hansen, head of commodity strategy at Saxo Bank, recently wrote, "When the price of silver reaches a certain level, manufacturers and end-users simply cannot afford higher costs." The industrial uses of silver include CECEP Solar Energy solar panels, electronic products, and chips that are crucial for the construction of artificial intelligence. "These companies are either trying to pass on the costs but failing, reducing their purchases, or looking for alternative materials," Hansen added. The spot price of silver hit a historic high above $93 this week, with an increase of nearly 26% since 2026. The price of this precious metal has soared by about 170% since 2025, far exceeding the 73% increase in gold during the same period. Compared to gold, silver's role is more complex because it is both a precious metal and a key industrial raw material. This means that it benefits from safe-haven demand as well as being closely related to long-term themes such as electrification, CECEP Solar Energy, and electronics. This dual nature makes silver particularly vulnerable to supply shocks. Last year, due to tariff concerns, a large amount of silver flowed into the United States, leading to abnormally low stocks in the London market. This was followed by a physical silver squeeze, further amplifying the rise in silver prices. Currently priced at around $91 per ounce, some industrial users have already started to react by either reducing usage or looking for alternatives. Recently, top Chinese photovoltaic companies LONGi Green Energy Technology and Jinko Solar announced they would begin to replace some silver with cheaper base metals. Nevertheless, Hansen pointed out that the impact of slowing corporate purchases and consuming existing inventories may take some time to fully manifest, thereby changing the market's overall view of the silver boom. "Every upward trend has an end, and for silver, the most probable brake factor is the shrinkage of industrial demand," Hansen said. In the past few days, silver prices have experienced a pullback as US President Trump announced this week that he would not impose tariffs on key minerals and instructed negotiations with trading partners on the issue of key minerals. Data released by the US government on Friday showed that hedge funds and other major speculative institutions reduced their net long positions in silver by 15% to 15,045 contracts in the week ending January 13, marking a new 22-month low in holdings. This article is reproduced from "Cai Lianshe", author: Bian Chun; GMTEight editor: Yan Wencai.