Spot silver opened with a surge on Monday, breaking through the $80 and $83 marks consecutively. More than half of retail investors firmly believe it will surpass $100 next year, while analysts warn of a 'generational bubble.' Elon Musk urgently cautioned that the industrial sector would be impacted.
On Monday (December 29), spot silver opened with a violent surge, breaking through the $80/ounce mark for the first time and quickly surpassing $83/ounce, with daily gains exceeding 5% and year-to-date increases expanding to $52. Meanwhile, spot gold opened higher on Monday, nearing new highs before retreating slightly, currently reported at $4,538/ounce.
Supported by escalating geopolitical tensions, a weakening US dollar, and thin market liquidity, precious metals extended their historic year-end rally.
Daniel Takieddine, CEO of Sky Links Capital Group, stated, 'The intensifying geopolitical tensions continue to support demand for safe-haven assets, including gold and silver.' He noted that thin market liquidity at year-end has also exacerbated price volatility.
According to Bloomberg, much of the easily accessible silver worldwide is stored in New York, awaiting the outcome of the US Department of Commerce's investigation into whether key mineral imports pose a national security risk. This review could pave the way for tariffs or other trade restrictions on silver.
Manav Modi, a commodities analyst at Motilal Oswal Financial Services Ltd., said, 'There are many trades or positions on paper: now you need physical quantities to fulfill these trades or positions, but there isn't much supply to meet this demand. You need actual silver to back up paper silver,' he said.
As silver prices surged to record highs, Elon Musk warned that manufacturers might face consequences. 'This is not good. Many industrial processes rely on silver,' Musk posted on X.
The metal's applications include electrification, solar panels, electric vehicles, and data centers, where demand has been growing, depleting silver inventories. However, beyond industrial uses, silver also serves as a monetary metal—a store of value.
Tony Sycamore, a market analyst at IG, stated that as more capital flows into the precious metals market, silver is experiencing a 'generational bubble.' He remarked, 'Expectations of multiple interest rate cuts by the Federal Reserve in 2026, along with strong buying from central banks and private investors, have supported the rise in precious metals. However, the primary driver recently has been the severe structural imbalance between supply and demand for silver, sparking a scramble for physical metal.'
The 'Kitco News Annual Silver Survey' showed that the vast majority of retail traders predict further gains for silver in 2026, while leading analysts also expect silver to rise higher next year, although other analysts warn of potential early setbacks and possible pullbacks after reaching peaks.
Last week, retail investors participated in Kitco News' silver survey, with nearly half of 'Main Street' investors predicting that the gray metal would challenge its all-time high in 2025.
A total of 212 retail traders (57%) anticipate that silver will trade above $100 per ounce next year.
Another 27% (99 retail investors) predict that the silver price will trade between $80 and $100 in 2026, while 11% (43 participants) expect the peak to fall somewhere in the range of $60 to $80.
The remaining 19 retail traders (5% of the total) believe that the silver price will retreat to the range of $40 to $60 per ounce, where it traded between September and early December this year.
Editor/Liam