Silver Prices Hit 14-Year High on Trade War and Supply Fears
Silver prices extended their strong upward trend on Monday, hitting a 14-year high as geopolitical tensions and tariff-related worries steer investors toward precious metals. During Asian trading, spot silver climbed as much as 1.6%, building on a 4% gain from the previous week and pushing year-to-date returns to 35%, outpacing gold’s 28% increase. This momentum reflects a combination of speculative buying and genuine industrial demand, especially amid risks that silver could be targeted in forthcoming U.S. trade actions.
A notable sign of market strain is the sharp rise in the one-month lease rate for silver, which surged above 6%, well above its typical near-zero levels, signaling heightened scarcity and strong physical demand. This tightening is accompanied by a growing divergence between London spot prices and New York futures contracts, echoing patterns seen earlier this year when tariff uncertainties spurred a surge in precious metal shipments.
Rising Physical Demand Despite No Current Tariffs
Although silver is not presently included in President Donald Trump’s tariff list, concerns about potential inclusion are prompting U.S. buyers to stockpile supplies. Priyanka Sachdeva, an analyst at Phillip Nova Pte Ltd., highlighted that both industrial and investment buyers are “front-running” possible trade restrictions, given silver’s vital role in industries like electronics and solar energy.
Silver’s appeal is enhanced by its lower price compared to gold, making it a more accessible safe-haven amid growing geopolitical and economic uncertainties. With gold trading near $3,360 an ounce, silver’s relative affordability at $38.97 per ounce has made it an attractive choice for cost-conscious investors and industrial users alike.
Structural Supply Deficit Bolsters Bullish Sentiment
Supporting the rally is a persistent structural deficit in the silver market. The Silver Institute reports that 2025 will mark the fifth consecutive year of supply shortfalls, driven by rising demand from green technologies such as solar panels and ongoing underinvestment in mining. This fundamental tightness underpins a bullish outlook for silver, particularly if trade tensions disrupt supply chains or increase stockpiling demand.
Meanwhile, gold continues to benefit from safe-haven flows, central bank acquisitions, and global trade and geopolitical worries. However, its recent gains have led some investors to take profits or shift focus to more affordable metals like silver and platinum.
Silver’s resurgence highlights its unique position as both an industrial essential and a crisis hedge. The combination of trade war fears, gold’s high price, and tight physical supply has created ideal conditions for silver to outperform. Should tariffs extend to precious metals or geopolitical risks intensify, silver’s rally could strengthen further. As inflation pressures and central bank policies evolve, silver’s dual role in industry and investment is likely to keep it in the spotlight.
