Silver mining stocks like Endeavour Silver (NYSE:EXK) and First Majestic Silver (NYSE:AG) surged 12% on Friday and are up over 2% during premarket Monday trading after silver prices reached a record high of over $57 (£43.1) per ounce.
While the surge could be attributed to the volatility in US stock markets and the cryptocurrency industry, factors like ongoing silver supply tightness and growing expectations for an interest-rate cut this month are also driving the precious metal rally.
US markets are fully pricing in a 25-basis-point rate cut in December due to ongoing weakness in the labor market and dovish comments from Federal Reserve officials.
Global Silver Hubs Facing Inventory Pressure
Industrial demand linked to the electrification of the global economy has resulted in significant supply deficits this year. Furthermore, massive volumes of silver poured into the US as investors and traders braced for tariffs under US President Donald Trump‘s trade policies.
Subsequently, all that extra silver in the US tightened physical inventories in major global hubs, especially in London’s over-the-counter market. Furthermore, strong buying from India added to the pressure, driving higher lease rates and premiums around the world.
Additionally, Silver inventories in warehouses linked to the Shanghai Futures Exchange recently reached their lowest levels in 10 years.
While a record amount of metal is flowing into London currently, easing a major squeeze, the cost of borrowing the metal remains higher than a month earlier.
‘The risk managers in financial and industrial entities did not want to let any metal go out of the States for fear that it might come back in at 35% higher, for example,’ according to Rhona O’Connell of Stone X.
Silver Powering the AI Boom
Silver has high thermal conductivity and a relatively higher electrical conductivity. These properties are driving its demand from across industries tied to artificial intelligence, renewables, and electric vehicles.
‘Over the course of the past twelve months or so, the underlying surplus has started to turn into a deficit for three reasons: the impact of the electrification of the vehicle fleet, artificial intelligence, and photovoltaics,’ said O’Connell.
According to Invesco’s Paul Syms, EVs have about 25 grams to 50 grams of silver in their components. He added that if industries move into solid-state silver batteries, each EV might need up to 1 kilogram or more of silver.
He added that in the longer term, this evolving dynamic could keep silver at reasonably high prices, which could continue climbing for some time to come.
Market Conditions Align With Robert Kiyosaki’s Predictions
‘Rich Dad Poor Dad’ author Robert Kiyosaki recently warned that the biggest market crash is here and urged investors to protect themselves with silver, describing it as the safest asset.
As the owner of multiple gold and silver mines, Kiyosaki has explained that silver will continue to be a scarce metal in the future. More recently, he forecast silver prices to reach $70 (£52.9) per ounce and possibly $200 (£151.2) in 2026.
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