Silver Crushes Gold With 152% Rally—Here's What You Should Know About The Tight Supply Story And Backwardation - Aya Gold & Silver (OTC:AYASF), Coeur Mining (NYSE:CDE)

Core Insights - Silver has experienced a remarkable rally of 152% year-to-date, marking its strongest annual performance since 1978, significantly outperforming gold, which is up 66.22% [1] - Both silver and gold reached record highs recently, with silver surpassing $82 per ounce before a subsequent decline of 14% [1] Market Drivers - Silver's rally is driven by its unique position as both a precious metal and an industrial commodity, with strong demand from sectors like solar panels, electric vehicles (EVs), and advanced electronics [2][5] - The initial surge was influenced by economic policies and trade tensions, particularly those initiated by President Donald Trump, alongside a supply crunch due to increasing industrial demand [2] Supply Dynamics - The global silver market is projected to face its seventh consecutive year of deficit by 2025, with a cumulative shortfall of nearly 800 million ounces since 2021, as mine output continues to decline [4] - The available inventory of freely traded silver has significantly decreased, making the market more sensitive to demand fluctuations, which could lead to substantial price increases with even minor demand upticks [4] Market Conditions - Silver has seen its best monthly performance since the late 1970s, gaining 33.16% since early December, attributed to tightening physical supplies and low inventories [6] - The market has entered a state of "backwardation," where spot prices exceed futures prices, indicating acute physical shortages [6][7] Future Outlook - Analysts predict that silver prices could test the $85–$100 per ounce range as structural deficits widen [8] - Investors are encouraged to consider exposure to silver through options like the iShares Silver Trust, which holds physical silver [9] Investment Opportunities - The surge in silver prices has not yet been fully reflected in the valuations of leading producers and junior miners, presenting potential investment opportunities [10] - Notable performers in the silver mining sector include: - Wheaton Precious Metals Corp. (+102.14% YTD) - Americas Gold And Silver Corp. (+452.04% YTD) - Coeur Mining Inc. (+195.32% YTD) - iShares MSCI Global Silver and Metals Miners ETF (+181.46% YTD) [10]