'Why are rings so expensive?'…Silver price jumps 117%, hits record high

Investment and industrial demand overlap amid limited supply

The Trump administration designated silver as a 'critical mineral'

Some warn of 'risk of sharp decline'

Silver prices have doubled from a year ago, marking a record high. As industrial demand increased in markets such as AI, prices moved and investment demand quickly followed, sending prices sharply higher. Some say the recent surge in silver prices has formed a 'bubble' and may face a correction.

Up 117% this year…Record high

On the 18th, according to the Singapore futures market, silver futures traded intraday at $67.18 per troy ounce, setting an all-time high. Compared with mid-December last year when it was below $30 per troy ounce, the price has surged about 117%. Over the past month alone, the price rose about 32%.

Silver prices have recently surged as industrial demand, investment demand, and tariff concerns overlapped. Silver is the metal with the highest electrical conductivity, and about half of global silver demand comes from industry. Recently, demand has increased in next-generation markets such as AI, electric vehicles, and robots. It is essential in various high-precision components such as electronic boards, sensors, and solar cells.

It was also affected by demand for gold investments amid interest rate cuts and inflation concerns. An asset management firm official explained, "Investment demand for silver is basically a substitute investment for gold," adding, "As gold prices rise and demand for gold investment increases, demand for silver investment also increases accordingly."

As silver prices surged, investment demand for silver itself has also increased. According to Koscom ETF CHECK, over the past month, $1,405,000,000 net flowed into the ETF investing in physical silver in global markets, 'iShares Silver Trust (SLV)'. During the same period, $239,200,000 flowed into the 'Aberdeen Physical Silver ETF (SIVR)'.

Overseas Korean individual investors have also turned their attention to silver ETFs. According to the Korea Securities Depository, SLV ranked 37th in net purchases of US investment products by domestic investors over the past month. Domestic investors net bought $26,042,984 of this ETF.

Trump's designation of silver as a 'critical mineral' also boosted silver prices

In the second half of this year, the US government designated silver as a critical mineral on the 7th of last month, which also pushed up silver prices.

Global silver supply flowed to the US in a short period starting in August, when the US Geological Survey released a draft list of critical minerals and the possibility of silver being designated as a critical mineral was raised. This is because if the US designates it as a critical mineral, imports could later be subject to tariffs.

Moreover, as investment demand entering the market seeing the rising silver prices overlapped, some exchanges experienced shortages of deliverable physical silver inventory. While inventory moved en masse to the US, the amount of silver tied up in investment products such as silver-related ETFs also increased.

In October, the London Bullion Market Association (LBMA) had a shortage of deliverable physical silver inventory, and silver prices broke through the then-record high of $50 per troy ounce.

"If Trump doesn't impose tariffs, prices could fall"

Some say that the recent sharp rise in silver prices may undergo a correction. Since part of the recent price rise is due to tariff concerns, if the tariffs do not materialize, that portion could be a 'price bubble.'

Hong Seong-gi, a researcher at LS Securities, said, "Silver is characterized by a smaller physical market size compared to gold," adding, "While industrial demand provides a base, investment demand is moving prices." He analyzed, "Recently, silver prices have risen sharply due to market inventory concentration caused by concerns over US tariff imposition," and "If the US decides not to impose tariffs on silver, prices could fall by that extent."

Seon Han-gyeol reporter always@hankyung.com