"Silver Rhapsody" surging again? Supply-demand deficit and industrial narrative resonate with silver struggling to breach $100 mark.

It was learned that the "spotlight moment" of the craziest metal so far this year, silver, seems to be far from over, despite this precious metal experiencing its largest drop in over a decade on January 30th and briefly breaking the epic level of over $100 per ounce. Some commodity analysts believe that based on strong industrial demand, long-term structural shortages in supply, and inflows of safe haven funds, the price of silver is expected to potentially challenge the psychological level of $100 in 2026 or even have a chance to surpass the historical peak of $120 per ounce. Some more aggressive predictions even set targets at higher levels. Despite undergoing a 30% correction from the all-time high of $121.678 per ounce set at the end of January, the value of silver has still more than doubled in the past year, far exceeding the increase in the largest market value precious metal, gold, and causing the ratio between gold and silver to reach a new low - that is, how many ounces of silver equal one ounce of gold. In comparison, the spot price of gold has risen by about 90% in the past year. Currently, the spot silver price is hovering around $85, rebounding nearly 20% from its low point in February. Analysts who have been tracking precious metals for a long time say that tracking the trajectory of gold prices and the ratio between gold and silver can provide important clues as to whether silver is undervalued. "The gold-to-silver ratio is currently hovering around 48, while the long-term average is about 65, with the long-term low value being 30," said Chris Mancini, portfolio manager of the gold fund at Gabelli. "If the ratio drops to the low point of 30, then with gold at $5,100 per ounce, the price of silver would be $170 per ounce." The market's fervent investment sentiment for silver highlights its continued surge in demand as an important metal for industrial purposes, the uncontrolled expansion of U.S. debt leading to a further shift of funds towards precious metals, and the increasing weight of precious metals in the portfolios of global investors. In the view of some analysts who hold a bullish stance on silver, as a "mood amplifier" for gold, silver is expected to continue to enjoy much stronger inflows of funds and gains than gold, with bets placed on silver potentially breaking through $100 again and reaching a new all-time high in the remaining time of this year, and the probability of this super bullish market reaching three digits still expanding. What is the core logic behind the dramatic fluctuations in silver prices? So why has the rise in the price of silver been so strong and the fluctuations so intense over the past year? Analysts generally believe that the recent high levels and intense fluctuations in silver prices can be attributed to several key macroeconomic factors, including the large-scale transfer of funds from dollar assets under the backdrop of a huge U.S. fiscal deficit and significant interest payments on national debt, geopolitical tensions, global economic uncertainty, and speculative forces flocking to the silver market. Investors often consider gold, silver, and other precious metals as the most classic hedge tool groups against inflation rates and other economic uncertainties. During times of market turbulence, these investments are often touted as "safe haven" assets because they typically do not respond as aggressively to economic or geopolitical conflicts as stocks and bonds. However, with the increasing scale of safe haven buying driving gold and silver to new highs this year, and with the recent strong push from high-leverage hedge funds and other speculative forces, the volatility of gold and silver has become even more pronounced than in the stock market. "This is not about silver, but about the broader macroeconomic and political environment," said Jeffrey Christian, a precious metals market expert and managing partner at CPM Group, in a speech. Christian pointed out that economists are increasingly concerned about the labor market's growing weakness due to the "AI revolution", the continued strong inflation rate under geopolitical tensions, and the long-term negative impact of tariffs and trade restrictions on the U.S. and global economies. Silver is fundamentally different from other precious metals assets because of its wide range of applications. It is not only a classic hedge tool against macroeconomic tensions, but also a key component of almost every cutting-edge technology, including CECEP Solar Energy solar panels, smartphones, televisions, semiconductors, and even AI data centers. The revaluation of the industrial demand narrative can be said to be the strongest narrative driving the surge in silver prices this round, as pointed out by the World Silver Association in its latest research report: the process of building AI data centers is in full swing, the trend of electrification/new energy (including photovoltaics), and the global shift towards electric vehicles, combined with continued supply-demand gaps, have made silver no longer just "following gold." The World Silver Association states that the 17% compounded annual growth rate of the photovoltaic industry, the 13% compounded annual growth rate of the electric vehicle industry, and the explosive growth of over three digits in global AI data centers together constitute the three pillars of growth in silver demand. The World Silver Association forecasts in this report that these industries will continue to drive demand for silver in the industrial sector until 2030, with the Association emphasizing that the global data center IT power capacity has grown from 0.93 gigawatts in 2000 to nearly 50 gigawatts in 2025, an increase of more than 53 times. The Association says that this exponential growth means larger servers, switches, and cooling systems globally, each requiring silver as a core component. The World Silver Association emphasizes that the large-scale penetration and application of silver in data centers is based on three main characteristics: the highest electrical conductivity ensures minimal energy loss in power transmission for servers, which is crucial for data centers that require 99.999% uptime; excellent thermal conductivity helps devices maintain a safe temperature range, reducing cooling energy consumption (cooling systems account for 7-30% of total data center energy consumption); and high corrosion resistance protects components in high electric load and temperature variation environments. However, this increasingly strong growth in industrial demand for silver has also led to a continuous shortage of silver supply globally. "Due to physical silver supply constraints, strong industrial demand, and rising investor interest in silver due to economic uncertainties, many of the top analysts on Wall Street still predict that silver prices will continue to rise strongly for the remainder of this year," said Peter Reagan, financial market strategist at the precious metals IRA company Birch Gold Group. He added that for retail investors, whether or not to invest in silver now depends on financial goals and risk tolerance. "Silver is much more volatile historically than gold," Reagan said. "Gold is considered to be long-term stability, while silver, due to its industrial demand, although it has higher potential returns, also comes with a higher level of risk." Is the "silver frenzy" heading towards a new bull market chapter? It should be noted that there are significant differences between physical silver and paper silver (physical silver and paper silver), that is, physical precious metals and paper investments in silver spot/futures assets through ETF shares and other means. In a volatile precious metals market, the performance of these two assets may vary depending on investor sentiment and whether they prefer to hold physical assets in their hands or favor long-term storage of physical silver. "Investors can obtain exposure to silver assets through physical gold/silver (including coins and bars), ETFs, or mining stocks. For most investors, ETFs provide the most practical way of gaining exposure to risk," said Michael Unger, Vice President of Investments and Planning at Coral Gables Trust. "Silver can serve as a useful hedge against inflation and an important diversification and allocation tool for investment portfolios. However, silver has already more than doubled in a year, increasing the possibility of short-term volatility," Unger said. "Instead of trying to predict the market's timing, investors should adjust gradually to a more diversified investment portfolio." Some commodity analysts and Wall Street investment banks have put forward views that silver is expected to challenge or even surpass the $100 level again, with some institutions making more aggressive predictions for the second quarter to reach new all-time highs. This extremely optimistic view is usually based on continued structural deficits in supply, physical inventory reduction, the restoration of the gold-to-silver ratio, and the fundamental logic of significant growth in industrial demand (especially in high-end manufacturing areas such as clean energy photovoltaics, automotive electronics, and AI data centers). The support from sustained structural deficits in supply and the increasingly hot demand in the field of cutting-edge technology will largely underpin the strong upward trend in silver prices. Citi expects silver prices to move higher in the second quarter of 2026 and may even reach the range of $110 to $150. Michael Widmer, head of the precious metals research department at Bank of America, gave an extremely bold range of $135 to $309, saying that this is based on the historical compression of the gold-to-silver ratio. Bank of America believes that if the gold price remains around $5,000 and the gold-to-silver ratio returns to the extreme level of 14:1 in 1980, silver could theoretically reach $309. Philippe Gijsels, senior strategist at BNP Paribas, believes that under the strong push of the Fed interest rate cut cycle and market euphoria, the upward trend in silver prices will continue until 2026, and he expects silver to be "very likely above $100 per ounce by the end of 2026." Keith Neumeyer, CEO of First Majestic, has publicly expressed his long-term view on silver trading prices above $100 per ounce since 2025 in several interviews. Lyn Alden, a well-known macro strategist and founder of the investment newsletter "Lyn Alden Investment Strategy," recently stated in an interview with VRIC Media that silver is more likely to further challenge the $100 mark in 2026, but it may no longer be a "high risk high return" opportunity. "Right now, I see this as a more symmetric high-risk trade, and I wouldn't be surprised if it stayed around $100, or dropped to $40 next year," she said. However, she emphasized that she is "lowering her expectations for future investment returns" as silver "has already realized much of her previous theories." Josh Phair, founder and CEO of Scottsdale Mint, a precious metals manufacturer and distributor, said in an interview, "We are in the midst of a metal resource race." "The U.S. is rapidly building AI data centers, and the U.S. must have it (physical silver) to maintain its position in the world. Taking inflation into account, the price of silver is still low." "If the $50 silver price in 1980 is adjusted for inflation, it has already exceeded $200. So, we can even say that the current price of silver is still quite low."