Silver hits a new high, strong ETF inflows support the upward trend

Silver prices hit a historic high during intraday trading on Friday, marking the second consecutive week of gains, with strong inflows into ETFs providing additional momentum for this surge.

On Friday, spot silver rose by as much as 3.9%, reaching a historic high of $59.33 per ounce.

(Silver breaks through the $59 mark, setting a historic high)

The inflow of funds into silver ETFs has been a key factor driving this rally. As of Thursday, in just four trading days, the total inflow into silver ETFs had already set a record for the highest weekly total since July. Dilin Wu, a research strategist at Pepperstone, stated:

These fund flows can quickly amplify price volatility and trigger short-term short squeezes.

On Friday, gold showed a mixed performance, initially rising 1% before turning lower. This caused the gold-silver ratio to fall below the May 2024 low, to about 72 times.

（Gold-silver ratio falls to 72 times）

Hebe Chen, an analyst at Vantage Markets, commented:

The excessive rise in silver indicates that it is no longer a quiet supporting role to gold. The market is beginning to recognize structural scarcity and rapidly growing industrial demand, not just safe-haven demand.

Supply-Demand Imbalance Supports Silver, Wall Street Optimistic About Next Year's Prices

The surge in silver has accelerated over the past two months, partly due to a historic squeeze in the London market.

Although this tension has eased in recent weeks as more metals have been shipped to this largest silver trading center in the world, other markets are currently facing supply shortages. Moreover, global silver demand has exceeded mine production for five consecutive years.

Silver prices have nearly doubled this year, with an increase exceeding 60% compared to gold. Wall Street Journal mentioned that some market participants are concerned about a repeat of the collapse scenarios seen in 1980 and 2011, when silver quickly retraced all gains after breaking through $48.

However, Sprott Money analyst Craig Hemke believes that the current economic, monetary, and physical supply environment is completely different from history. Hemke suggests that the current price pattern of silver is more akin to the breakout process of gold in 2023-2024.

Hemke expects a true breakout for silver to occur in early 2026, stating:

Just like gold two years ago, silver is consolidating and building a base near historic highs.

If a breakout occurs next year, similar to gold's doubling since March 2024, silver could reach $100 per ounce in the latter half of 2027. This week, Citigroup analysts also stated in a report that based on the Federal Reserve's interest rate cuts, strong investment demand, and physical shortages, silver prices could rise to $62 per ounce within the next three months.