Silver’s historic 77% year-to-date run might have more room, but investors should brace for volatility. Goldman Sachs shared this outlook with its clients on Sunday, confirming the metal’s medium-term bullish momentum, driven by surging investment flows.
According to Reuters, Goldman noted that silver's smaller and less liquid market means it reacts far more dramatically to investor inflows than gold does.
"The silver price can react sharply to such [investor] flows because the market is less liquid and roughly nine times smaller than gold's, amplifying price moves," the bank's analysts said. While gold's rally has been anchored by central-bank buying and robust ETF inflows, silver's climb has been powered almost entirely by private investors and speculative demand.
Gold-backed exchange-traded funds hold around $450 billion in assets, compared to just $50 billion for silver ETFs. That imbalance magnifies both gains and losses for silver investors. For every 1,000 metric tons of new silver bought, prices typically rise by 1.6%.
Still, Goldman sees two near-term threats. The first is the potential cooling of ETF inflows and rising inventories in London's trading hubs.
If investor enthusiasm fades or if traders delay returning silver from the U.S. due to ongoing tariff investigations, "volatility could spike and gains could reverse quickly," the bank said.
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Silver lacks the structural support gold has through steady central bank demand. While silver benefits from its industrial role in solar panels, electronics, and emerging technologies, this link is weakening.
"Solar growth is slowing, and manufacturers are substituting silver with cheaper materials like copper," the bank noted. Its research suggests industrial demand alone cannot sustain higher prices long-term.
Meanwhile, analysts at Bank of America expect the solar drop to be as much as 11%. Yet, they see the silver market remain in deficit in 2026.
"An 11% decline in total silver demand next year will not be enough to push the market into a surplus," the bank's strategists said. They are forecasting the metal could climb toward $65 per ounce by 2026, supported by tight supply and persistent investor interest.
The latest geopolitical turbulence just added fuel to the precious metal rally. On Friday, President Donald Trump announced sweeping 100% tariffs on Chinese imports, escalating a months-long trade dispute. In response, Bloomberg reported Sunday that Beijing urged Washington to ‘halt tariff threats and return to dialogue,' warning that it would retaliate if the measures proceed.
The escalating friction between the two largest global economies has refueled interest in safe-haven investments. With traders taking precautions against possible supply issues and shifts in monetary policy, the precious metals sector remains under the spotlight.
Price Watch: iShares Silver Trust ETF (NYSE:SLV) is up 68.70% year-to-date.
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