In a December 19, 2024, Barchart article on silver, I wrote, “As silver’s price consolidates, the precious metal could build steam for a run at much higher prices in 2025.” I highlighted the factors supporting higher silver prices in 2025, concluding:
Consolidation can be healthy for a market. As silver digests the latest $35.07 continuous contract high, it could be building cause for a move to higher highs in 2025.
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Nearby COMEX silver futures were at the $30.64 per ounce level on December 18 and have moved over 9.3% higher in March 2025 to above $33.50 per ounce. As the 2011 and 1980 highs in silver were around the $50 per ounce level, silver could have substantial upside potential when the current consolidation below the October 2024 ends.
A short-term bullish trend since mid-December 2024
The active month May COMEX silver futures traded to a $29.405 low on December 19, 2024.
The daily chart highlights the bullish pattern of higher lows and higher highs over the past weeks, with May silver futures reaching a $34.56 peak on February 14, 2025. At around the $32.75 level, silver futures were closer to the mid-February high than the mid-December low in mid-March.
Mexico is the world’s leading silver producer
The world’s leading silver-producing countries in 2024 were:
As the chart highlights, Mexico leads the world in silver mine supply, producing nearly double the amount of second-place China.
Mexico is a critical silver supplier to the world.
U.S. tariffs have caused dislocation in the precious metals markets in London and the U.S.
The leading markets for gold and silver trading are in Europe and the United States. Trump administration tariffs have caused dislocations in the precious metals markets because it is uncertain whether gold, silver, and other precious metals will be subject to the tariffs.
The wholesale precious metal markets are in the U.K. and Switzerland, while the futures markets are in the United States. The EFP or exchange for physical reflects the price differences between silver (and other precious metals) for London and New York delivery.
The tariffs have caused significant dislocations in EFP rates over the past weeks, as metal has flowed from Europe to the U.S. in advance of tariffs. Dealers have been delivering silver and gold against short positions in the futures markets, with holdings from the wholesale market.
Gold has a lender of last resort- Silver does not
Central banks and governments worldwide hold gold as an integral part of foreign currency reserves, validating gold’s role as a means of exchange. While silver had historically been a reserve asset, governments and central banks no longer own silver because of the metal’s price volatility.
Central bank gold holdings make them a lender of last resort in the gold market, limiting the impact of shortages in the wholesale London market. Meanwhile, silver holdings are far less concentrated. The lack of a lender of last resort in the silver market makes the metal more susceptible to the price distortions caused by tariffs and trade barriers.
Eclipsing the 2024 high could lead to an explosive rally
Silver could be heading for a challenge of the 2024 $35.07 high on the long-term chart.
The quarterly continuous silver futures chart highlights that a break above the $35.07 level could ignite an explosive rally. Minor technical resistance is at the late 2012 $35.445 high and the early 2012 $37.58 peak, but the upside targets are the 2011 $49.82 high and the 1980 $50.36 record peak.
Over the past months, the price action suggests that silver prices are heading higher. While tariffs are causing distortions in silver prices, the rally began from the 2020 low, far before tariffs impacted silver prices. Trade barriers could be the factor propelling silver high, but the trend over the past five years suggests that silver prices are heading for a challenge of all-time highs as gold, its precious sibling, is already in uncharted territory on the upside.
On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
