Key Takeaways
- The price of silver reached $75 per ounce on Friday, December 26, due to thinner year-end liquidity and expectations of additional rate cuts in the United States.
- The major reason for silver’s price rise has been identified to be the surge in industrial demand post the recent global green energy adoption.
- The prospects of a Fed rate cut are another factor that is driving the price of silver and other precious metals like gold and platinum.
- Analysts at Goldman Sachs say that Gold is a better investment than silver when the downside risk and volatility are taken into consideration.
Silver is following the path of Gold and Platinum in terms of price rise. The price of this precious metal has reached $75 per ounce on Friday, December 26. The sudden, but calculated spike in Silver is due to several macroeconomic factors, such as thinner year-end liquidity and expectations of additional rate cuts in the United States. Strong industrial demand, particularly from solar panels and green energy, along with a persistent deficit in supply, is also a good enough reason for Silver’s price rise. Silver is seeing the price hike enjoyed by gold and platinum, while still being much less costly than they are.
Spot silver prices climbed to intraday highs near $75.82 before settling around $75.125, marking a 4.8% daily gain from the previous close of $71.685. The day’s low was recorded at $72.72. Silver has had intense intraday trading with high trading volumes.
Reasons for Silver’s Price Surge
Silver’s price rally gained wider importance in the stock market when it reached the $60 per ounce mark. The price rally is now confirmed by its reaching $75, and the next big spot would be $100.
The major reason for silver’s price rise has been identified to be the surge in industrial demand following the recent global green energy adoption. Silver is commonly used in the making of solar panels; approximately 20% of the silver produced globally is used for this purpose. Electric vehicles also require twice as much silver in their making as traditional cars due to the use of semiconductors.
Despite the rising demand, reports say, the supply metric has not improved. There is very little silver being produced compared to the demand. Policy changes in Mexico and Peru, the largest producers of silver, have brought in restrictions on operations.
The prospects of a Fed rate cut are another factor that is driving the price of silver and other precious metals like gold and platinum. Due to all these reasons, investors are largely flocking to silver, The Wall Street Journal reports.
Is Silver a Safe Bet?
Even amidst the rising demand for silver, whether it is a safe bet is a question pestering investors. Some analysts are of the opinion that gold is safer for investment than silver. For instance, analysts at Goldman Sachs say that Gold is a better investment than silver when the downside risk and volatility are taken into consideration. Moreover, silver has the tendency to rise and fall between cycles. For silver, the prospects are not certain, given the uncertainty of the macroeconomic conditions and the chances of inflation.
