In a January 9, 2025, Barchart article on the precious metals sector in Q4 and 2024 and where they are heading in 2025, I wrote, “Silver ran out of upside steam at the highest price in a dozen years and settled 2024 at $29.242 per ounce. Silver was higher in early 2025, with the price above the $30.80 per ounce level, and the bullish trend since the 2020 low at $11.64 remains intact.” Silver prices rose 21.41% in 2024 and were 10.34% higher than the 2024 closing price at the end of January 2025. March COMEX silver futures settled at $32.265 on January 31, 2025, and were higher in February.
Silver’s trend is higher
Silver continued to make higher lows and higher highs in February, reaching over $34 per ounce before pulling back.
The daily chart shows silver’s bullish trading path since December 2024. Meanwhile, the path of least resistance in the longer-term chart is also higher.
The monthly chart highlights that silver’s rally began at the 2020 pandemic-inspired low below the $12 per ounce level.
Mexico is the world’s leading silver-producing country
The world’s leading silver-producing countries in 2023 were:
The chart shows that Mexico led the world in silver output in 2023, producing nearly twice the amount as second-place China and third-place Peru.
Trade frictions between the U.S. and Mexico are distorting the silver futures market
While U.S. President Donald Trump delayed the proposed 25% tariff on goods imported into the United States from Canada, the issue remains a clear and present danger for Mexico. It remains unclear if silver would fall under the tariff umbrella, and that uncertainty has impacted the price.
London is the hub of international physical silver trading, while the most active futures market is the CME’s COMEX division. Silver has been leaving warehouses in Europe over the past weeks, heading to the U.S. as the threat of tariffs has caused the silver ETP, the transaction reflecting the price of silver in London versus silver’s price in the futures market, has moved to a premium for the U.S. market. We have seen the same dynamic in the gold market with the yellow metal moving from Europe to the U.S. However, silver could be more susceptible to price distortions than gold for the following reasons:
- Gold production is ubiquitous, with the leading output coming from China, Australia, Russia, Canada, and the United States. Mexico is the seventh-leading gold-producing country, behind Kazakhstan and ahead of Indonesia.
- Gold is easier to transport because of its high value. Significant quantities of silver often travel by ocean vessel, increasing the time necessary to move metal from Europe to the United States.
- Central banks worldwide own vast quantities of gold, which they hold as a reserve asset. Central banks and governments are the lender of last resort, adding liquidity to the gold market. There is no lender of last resort in the silver market.
The bottom line is that the tariff situation makes silver far more vulnerable to significant price variance than gold.
Gold tells us that silver could challenge the 2011 and 1980 highs
While silver has been in a bullish trend since the March 2020 low, gold’s bull market began two decades earlier.
The quarterly chart illustrates that gold’s bullish trend began at the 1999 low below the $253 per ounce level. Gold has made higher lows and higher highs for over a quarter of a century, reaching over ten times the price at the 1999 low. Gold is now approaching a challenge of the $3,000 level, while silver remains significantly below its record high.
The quarterly silver chart reflects that below $33, silver futures are nearly 51% below the 2011 $49.82 high and 52.6% under the 1980 $50.36 record peak.
Silver’s next technical resistance level on the long-term chart is at the Q1 2012 $37.58 per ounce high, which could be a gateway to the 2011 and 1980 price peaks.
SLV is the most active silver ETF product
The most direct route for investment or a risk position in silver is through the physical market for bars and coins. The COMEX futures provide a physical delivery mechanism. Meanwhile, the iShares Silver Trust (SLV) is the most liquid silver ETF product. At $29.31 per share, SLV had over $14.16 billion in assets. SLV trades an average of over 23.7 million shares daily and charges a 0.50% management fee.
SLV’s fund summary states:
The latest rally in March COMEX silver futures took the price 17.48% higher from $29.145 on December 19, 2924, to $34.24 on February 14, 2025.
Over the same period, SLV rose 15.6% from $26.19 to $30.27 per share. SLV trades during U.S. stock market hours, while silver futures trade around the clock. Therefore, the ETF can miss highs or lows when the stock market is closed.
Trade frictions between Mexico and the U.S. are bullish for silver, but time will tell if any potential tariffs include silver and other precious metals. Meanwhile, silver has been in a bullish trend over the past five years, which began long before tariffs were a factor for the price path. I remain bullish on silver prices and expect them to continue to make higher lows and higher highs in 2025.
