Why silver prices surged, then dropped overnight

Core Viewpoint - The price of silver has experienced significant volatility and growth, reaching record highs, driven by economic uncertainty and changes in trade policy, particularly from China [2][4]. Price Movement - Silver's price surged from a range of $15 to $25 per ounce over the last decade to over $40 this fall, peaking at $82 at the end of December, before settling around $70, which is more than double its value from a year ago [2]. Economic Context - Precious metals, including silver, tend to perform well during economic uncertainty, with investors seeking safe-haven assets amid chaotic economic policies [3]. - Anticipated cuts to federal interest rates are contributing to the rising prices of precious metals [4]. Supply Concerns - China's new trade policies aimed at protecting resources and the environment may further impact silver supply, raising concerns among investors [4][6]. - China is the second-largest supplier of mined silver, and any changes in its export policies could significantly affect global supply [6]. Industrial Demand - Silver has diverse applications, particularly in electric vehicles and solar panels, which have seen substantial growth in recent years [5][7]. - The solar industry’s demand for silver has tripled over the past decade, highlighting its importance in renewable energy technologies [7]. Investment Risks - Analysts at Goldman Sachs have indicated that silver is a riskier investment compared to gold, predicting potential volatility and downside price risks for silver [8][9]. - Without institutional support like that for gold, silver prices may be more susceptible to corrections [10].