Peter Krauth : Why Silver’s Rally Has Only Just Begun

Silver’s advance is no longer a speculative move or a short-term squeeze. It is increasingly defined by structural forces that are tightening supply while expanding demand across multiple fronts. The silver price recently touched $92 after breaking long-standing resistance, which reflects conditions that have been building for years rather than weeks. What once appeared ambitious now reads as confirmation of a longer-term thesis grounded in fundamentals.

In a recent Live from the Vault episode, Andrew Mguire and Peter Krauth outline how the metal’s steady climb since early 2024, when prices bottomed near $22, marks the beginning of a sustained cycle. Instead of sharp rallies followed by deep corrections, the move has been persistent, suggesting a market under pressure from genuine scarcity and consistent accumulation.

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Silver’s path higher has been characterised by a sequence of former ceilings turning into floors. Levels that previously capped rallies, including $50, have now acted as bases for further advances. This transition signals strength rather than exhaustion, indicating that buyers continue to absorb available supply.

Psychological milestones are coming into view. With gold assumptions near $5,000 and the gold-silver ratio compressing toward historical norms, simple ratio analysis implies silver prices around $100. As Peter explains, a deeper compression combined with rising gold prices could extend projections into the $125 to $150 range. These estimates follow arithmetic rather than speculation, anchored in observed supply constraints and persistent investment flows.

Despite periodic selling linked to commodity index rebalancing, silver has shown little willingness to retrace. Forced liquidation has been met by steady buying, implying that long-term participants are accumulating on weakness. This behaviour is consistent with a tight physical market where available metal is limited.

Supply pressures are becoming more pronounced. China controls the majority of global refining capacity and has imposed strict export limits. At the same time, Western governments have designated silver as a critical mineral, underscoring its strategic importance. With refining and distribution increasingly concentrated, global availability is constrained at precisely the moment demand is rising.

Industrial usage now accounts for roughly two-thirds of total silver demand, a sharp increase from a decade ago. Electronics, solar panels, artificial intelligence infrastructure and data centres are driving this shift.

AI workloads require substantially more electricity than conventional computing, encouraging technology companies to build dedicated energy capacity. Solar has emerged as the preferred solution because it can be deployed faster than nuclear power. Paired with battery storage, solar installations are increasingly able to provide continuous supply for energy-intensive facilities.

These developments matter for silver because photovoltaic systems rely on it for conductivity and efficiency. Manufacturers have limited scope to reduce silver content without sacrificing performance, meaning higher prices are likely to be absorbed rather than avoided.

Advances in battery technology add another layer. Solid-state batteries promise longer ranges, faster charging and longer lifespans, but require greater quantities of silver. If adopted at scale across vehicles, storage and data centres, demand could expand materially.

Industrial growth is now matched by accelerating investment demand. Exchange-traded funds require physical metal, and revised projections indicate hundreds of millions of ounces of inflows over the coming year. Physical coins and bars are adding comparable volumes.

Combined, these purchases represent a substantial share of annual mine supply. Industry forecasts point to record deficits that exceed previous peaks, reinforcing upward price pressure.

Additional participation from systematic funds and commodity advisers remains limited so far. Their eventual entry could introduce further persistent demand, tightening the market even more.

Silver’s market is small relative to gold, and the mining sector is smaller still. When capital seeks exposure, flows can overwhelm available supply quickly. This imbalance creates conditions where price movements accelerate once momentum builds.

Taken together, constrained refining capacity, expanding industrial usage, rising investment flows and persistent inflation expectations present a coherent picture. 

According to Peter, the probability of sustained strength outweighs the likelihood of a return to former lows. As the seasoned expert explains, silver is increasingly defined by structural scarcity rather than cyclical enthusiasm, positioning the metal for continued gains as these forces compound over time.

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