Tag: investment

Silver’s “Dual Nature” in Full Effect; Monetary & Industrial Demand Combine to Push Metal to 14-Year High

After lurking in gold’s shadow throughout much of the current precious metals bull market, silver is finally having its moment in the spotlight. It seems that silver’s unique “dual nature” as both a classic safe-haven monetary metal and critical industrial metal is largely optimized right now…prompting not only silver’s outperformance of gold so far in 2025 but also raising speculation that it could represent the superior metals allocation through at least the near term.  

It’s not unusual, of course, for gold to outshine silver whenever the precious metals bull decides to make another charge. Gold’s longstanding reputational dominance as the premier hedge metal means many will tend to think of it first as a refuge during the periods of heightened economic and geopolitical uncertainty that frequently set the metals bull off and running.

There’s something else: silver’s demand as an industrial metal, which accounts for roughly 55% of its overall demand. While having two different fundamental demand sources might seem particularly advantageous for an asset, it can be a complication in the case of silver. That’s because the worrisome conditions which can spark interest in silver as a safe haven will tend to hurt the economic growth likely to drive its industrial demand.

It is, in fact this potential for silver’s significant demand by numerous industries to act as a headwind to its safe-haven demand that’s viewed as another key reason for its underperformance, relative to gold, in recent years.

All of that said, there are times when silver’s dual demand sources manage to thrive at the same time. And when that happens, the result can be a double-barreled silver surge, one so great it powers the white metal past its more acclaimed counterpart.

“Perfect Storm” of Silver Activity Has Metal Sitting on the Doorstep of $40

That “perfect storm” of silver activity appears to be what we’re witnessing right now. On the strength of its two most fundamental demand sources, silver recently surpassed $39 per ounce for the first time in nearly 14 years. And while the price has since beat a modest retreat to around $38.50 per ounce, the metal’s fresh wave of energy has put it up about 32% year-to-date, slightly ahead of vaunted gold, which has risen 28% over the same period.

Explaining silver’s continued aappeal as a safe-haven asset in the current climate, Solomon Global analyst Nick Cawley said, “Currency debasement typically drives investors toward hard assets, and silver and gold have benefited from this trend. The dollar’s weakness stems partly from ongoing concerns that U.S. inflation may remain sticky due to proposed tariffs and other policy measures.”

“These inflationary fears have triggered a renewed surge in demand for safe-haven currencies and precious metals,” Cawley added. “Investors are increasingly seeking protection against potential currency devaluation and purchasing power erosion, making silver an attractive hedge against economic uncertainty.”

Inflows Into Silver ETPs This Year Have Already Surpassed 2024 Totals

Inflows into silver exchange-traded products (ETPs) certainly tell that story, at least in part.

Noting that “heightened geopolitical and economic uncertainties, along with positive price expectations, spurred silver investment in the first half of 2025,” The Silver Institute recently reported that silver ETPs saw net inflows of 95 million ounces in the first half of this year…more than the total inflows received by the securities for all of 2024.

According to other observers, silver’s industrial demand also is going a long way to supporting prices this year…demand cued in large part by a big uptick in semiconductor sales.

Semiconductor Surge Is Another Powerful Real-Time Silver Driver

“Semis sales reached a record high in 2024 and are expected to show double-digit growth this year, according to the Semiconductor Industry Association (SIA),” analysts at German global technology company Heraeus recently explained. “Year-to-date, semis sales are well ahead of last year, with May 2025 sales of $59 billion nearly 20% higher year-on-year. This follows an increase in global revenue of 19.1% year-on-year in 2024.”

Connecting the dots to silver demand directly, the Heraeus analysts added:

“The rapidly expanding semis market, driven by AI and cloud infrastructure advances, indicates the electronics market is currently strong, which should see silver demand in electronics rise this year. This may be enough to offset the expected decline in silver demand in solar PV (photovoltaic) applications this year and should have a positive price impact.”

Structural Case for Silver Continues to Improve

Together, the stronger embrace of silver by investors who recognize the utility of a cheaper safe-haven alternative…as well as the sustained benefit to silver industrial demand energized by the manic growth of knowledge technologies…enhance the viability of a longstanding but unfulfilled structural case for the white metal.

It’s a structural case long rooted in a variety of highly regarded drivers, including:

  • the accelerating global move to silver-critical renewable energy;
  • a silver supply deficit now in its fifth year;
  • and persistent economic, fiscal and geopolitical uncertainty, which is conducive to heightened investor interest in real assets possessed of naturally occurring safe-haven properties.

Should the accumulation of additional key silver drivers – such as the current and expected future growth of the semiconductor market – continue in the face of deglobalization, the resulting assembly likely will serve to further strengthen the metal’s existing robust structural outlook. Importantly, it could pave the way for silver to keep benefiting simultaneously from both safe-haven-specific and industrial-specific supports. And if that happens, it would be reasonable to expect silver to climb back into price territories unseen for decades.

This post is created and published for general information purposes only. The Gold Strategist blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

HSBC: Affluent Investors Flocking to Gold

It’s no secret that the global economy has grown exponentially more complex and uncertain in recent years. And as it has, evidence continues to emerge that the world’s most astute and best-capitalized investors are turning to gold as a way to help hedge the risks posed to their conventional holdings.

More proof of that can be found in the recently published 2025 edition of HSBC’s annual Affluent Investor Snapshot. According to the report, affluent investors – defined as those with at least $100,000 in investable monies – increased their allocations to alternative assets this year by 100% over 2024…but increased their allocations to gold, specifically, by 120%.

By now, many are familiar with the significant degree to which central banks – certainly among the world’s most affluent investors – have embraced gold. Net purchasers of the metal since 2010, central banks have supercharged their demand to a whole other level in recent years as concerns about global stability have ratcheted higher, stockpiling gold at or near record annual pace since 2022.

Gold Ownership Among the Affluent Expected to Double in the Next 12 Months

Now, it seems, an increasing number of the world’s better-heeled individual investors are following suit, with fully half of the respondents to the HSBC survey saying they expect to own gold within the coming year. That would double the current level of ownership among the demographic.

“Diversification is one of the most effective ways to weather uncertainty, and these findings highlight how affluent investors are building more diversified portfolios,” said Willem Sels, Global Chief Investment Officer of Private Bank and Premier Wealth at HSBC.

But not just any old diversification will do during these especially murky days in the global economy, which is where gold comes in.

For one thing, gold’s fundamental lack of correlation to more mainstream assets has the potential to serve investors as a particularly effective diversifier. Beyond that, the metal’s head-turning record of appreciation since the beginning of the current millennium – a period that has seen a noticeable uptick in uncertainty – highlights the asset’s capacity to optimize portfolio growth; since January 2001, the price of gold has increased more than 1,100%, making it one of the best-performing assets of the last quarter-century.

As I noted earlier, the deliberate move to gold is part of a broader worldwide shift toward the adoption of a more multi-asset approach to portfolio design. In addition to their sizable increase in gold allocations to gold in the past year, investors raised their allocations to commodities, investment real estate and private equity/credit by 33%, 37% and 100% over the same period.    

Gold Is “the Standout Asset Class” Among Alternatives Right Now

Still, it’s clear that gold is seeing the most investor energy right now among alternative assets, with HSBC noting:

“Alongside alternatives, gold has emerged as the standout asset class of the year.”

To be sure, there are those who think gold is going to weaken from here now that fears of draconian tariff-induced outcomes are subsiding. But as I and so many others have been saying, the sorts of headwinds that might serve to constrain gold in the shorter term likely are no match for the much more foundational (read: structural) drivers…such as ongoing fiscal profligacy, rising geopolitical uncertainty and growing aversion to the U.S. dollar…sure to keep gold buoyant in the years to come.

This post is created and published for general information purposes only. The Gold Strategist blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

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