Silver price surpasses US$60 for the first time ever…doubled this year

Commodity Focus

Supply Shortage·Surging Investor Demand

The international silver price has exceeded US$60 per troy ounce for the first time.

On the 9th (local time), Bloomberg News reported that the silver price hit an all-time high of US$61.47 per troy ounce. It rose 5.7% from the previous session. On the 10th it fell slightly and traded at US$61.09 per troy ounce. Silver, which was around US$28 per troy ounce at the start of the year, has surged by more than 100% this year. The increase was larger than that of gold, which rose about 60% over the same period.

Bloomberg News analyzed that the recent rise in silver prices is due to expectations of a rate cut by the U.S. Federal Reserve (Fed). Financial markets expect the Fed to cut the policy rate by 0.25% point at the Federal Open Market Committee (FOMC) meeting on the 10th. Rona O'Connell, head of research at StoneX Financial, said, "Investors are definitely expecting a rate cut." Usually, when policy rates fall and the dollar weakens, demand for safe-haven assets such as gold and silver increases.

A physical market supply shortage and surging investor demand are also cited as factors in the silver rally. The global silver research group the Silver Institute estimated this year's silver production deficit at over 200 million troy ounces. The shortfall has increased compared with last year (167 million troy ounces). Global silver mine production this year is expected to be about 813 million troy ounces, below 2021 levels.

Some analysts say that the boom in artificial intelligence (AI), electric vehicles, and the energy transition has also helped drive the rise in silver prices. In January, the Silver Institute forecast that industrial silver demand would exceed 700 million troy ounces for the first time this year, as global solar installations are expected to hit a record high.

Reporter Kim Ju-wan kjwan@hankyung.com