Silver’s Little Setback: A Spot of Bother

by

Goodness me, what a to-do! Silver, that rather gleaming metal, has been experiencing a bit of a wobble, a distinctly uncheerful descent from its recent, frankly rather giddy, heights. It’s down a substantial 36% from its peak of $121, which, as anyone with a passing acquaintance with figures will tell you, is not a trifle. Those investors who’ve been dabbling in the iShares Silver Trust (SLV +6.28%) may be finding their portfolios looking a bit peaky, and one can’t say one blames them. But fear not, for a closer look reveals a situation that, while not entirely without its complications, is hardly cause for a complete and utter panic.

Industrial Considerations and a Touch of the Blues

Now, silver did rather soar last year, climbing a most impressive 144%. This was largely due to a bit of geopolitical jitters surrounding President Trump and his, shall we say, forceful approach to trade. The tariffs themselves haven’t directly affected silver, being exempt for the moment, but the resulting uncertainty did give the dollar a bit of a fright, sending it down 9.25% in the last twelve months. A dashedly unsettling state of affairs, what!

And then there was China, the world’s largest exporter of the stuff, announcing some export restrictions. This caused a bit of a flutter amongst the more excitable investors, fearing a supply squeeze. However, a closer inspection reveals that these regulations have been in place since 2019, and producers claim sales volumes haven’t actually changed much. In fact, China’s exports increased to 5,100 tons last year – the highest in sixteen years! So, the supply fears, it seems, were a bit overblown. Though, of course, we’ll need to keep an eye on the 2026 figures to be absolutely certain.

The real trouble, you see, is that these high prices are giving the industrial silver market a bit of a headache. Silver is splendidly conductive, making it useful for electronics, batteries, and those new-fangled solar panels. But when the price gets a bit steep, alternatives start looking awfully attractive. Bloomberg reported just recently that LONGi Green Energy, a major Chinese solar panel manufacturer, is planning to use base metals instead. A shrewd move, what! And a sign that this trend might continue.

History, as Usual, Offers a Warning

This isn’t the first time silver has had a bit of a giddy spell, you know. Over the last half-century, it’s entered bubble territory on three other occasions, most recently in 2011, after the Great Financial Crisis. The factors driving those previous surges are remarkably similar to those we’re seeing now.

Back then, Moody’s gave the U.S. a rather unfortunate credit rating downgrade, and the Eurozone crisis caused a bit of a run on fiat currencies. It’s tempting to think this time will be different, but history, as a rule, rarely obliges. Eventually, the enthusiasm cools, investors take their profits, and prices settle down to a level dictated by good old-fashioned supply and demand. This isn’t unique to silver, of course. Crude oil, rhodium, cobalt – they’ve all had their moments of exuberance, followed by a rather less cheerful return to earth.

A Bit of Prudence is Always a Good Thing

Silver has been used as a store of wealth for centuries, and it’s tempting to think of it as some sort of special asset class, immune to the usual booms and busts. However, the recent rally and subsequent wobble prove that it’s just as volatile and speculative as anything else. While it adds a touch of diversification to a portfolio, investors should remain aware of the risks and avoid getting overly exposed. A bit of prudence, you see, is always a good thing.

Read More

2026-02-18 19:32