Editor’s Note
This article discusses the recent addition of silver to the U.S. critical minerals list, highlighting its strategic importance for key industries and the geopolitical considerations of its supply chain.
Silver has been included in the list of critical minerals compiled by the U.S. Geological Survey and the Department of the Interior. The decision was made on November 7th and was anticipated by the industry and market analysts.
Silver is an essential mineral for various industries (renewables, defense, and advanced electronics). The U.S. imports silver, while a large portion of global refining comes from China, representing a geopolitical risk.
The inclusion of silver in the list reinforces the bullish narrative that has surrounded it in recent years. The increase in industrial demand, coupled with limited and high-risk supply, has caused a structural deficit in recent years.
The price shows an exponential upward trend and demonstrates great resilience. In recent weeks, the silver futures have recovered nearly $10 per ounce, surpassing the previous all-time high and fully recovering from the late-October crash.
The structural scarcity linked to the industrial uses of silver is being exacerbated by a strong increase in demand for jewelry and for investment or value storage due to its safe-haven asset characteristic.
Silver demand from India has skyrocketed for cultural reasons (gifting of jewelry during key dates concentrated in the last quarter of the year), as has investment demand through physical replication ETFs.
Silver is emerging in the wake of gold, as a substitute. High gold prices linked to risks and economic uncertainty have caused market participants to seek alternatives.
In fact, silver is recovering ground against gold. In the last 6 months, the ounce of silver has appreciated by 64%, more than doubling the rise of the gold ounce, which has been 29.74%.
This circumstance has caused the gold/silver ratio to settle in the central band of the last few decades, between 80x and 65x.
Now, the big question is: has silver had enough with this rise, has it already discounted all the price? As always, the answer is not clear, but a series of circumstances make it better not to go against the current trend.
On one hand, the scarcity of a commodity with limited supply is a powerful fundamental argument. On the other hand, from a technical perspective, the positive momentum is very strong and the trend in precious metals is widespread.