Precious metals, including silver, have hit many new record highs, driven by industrial demand and concerns about geopolitical instability.
Silver futures rose seven percent early Tuesday after futures for the commodity hit a record high overnight on Monday, reaching $80 per ounce for the first time. The record-high was short lived; however, as silver logged its largest single-day drop since February 2021.
“This is a historic move, KKM Financial CEO Jeff Kilburg said Monday. “We haven’t seen a move like this in a long time.”
“We’re seeing commodities as one of the top performers for next year … but the source of the performance is more cyclical commodities than defensive precious metals,” Florida Ielpo, head of macro at Lombard Odier Investment Managers, said.
Other commodities, such as gold and copper, experienced a similar recovery after a large dropoff.
Gold, silver, and other commodities are increasingly viewed as safe haven assets, benefiting from increased geopolitical tension while also being seen as a hedge against inflation.
Matthew McLennan, head of the global value team at First Eagle Investments, said industrial countries’ fiscal deficits have reinforced the “monetary value of gold.”
“The value of gold as a monetary potential hedge has reemerged,” McLennan continued. “Gold went from being depressed relative to the nominal assets that you would want to use as a potential hedge against it, to more rationally valued. And I think the other precious metal complexes followed it higher with some leverage.”
Future interest rate cuts and concerns about silver prices have driven up prices.
Telsa CEO Elon Musk has warned that China’s export restrictions on silver, which will take place January 1, are “not good.”
“Silver is needed for many industrial processes,” Musk wrote. The commodity is often used in electronics, solar power panels, data centers, and electric vehicles.
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