Should You Buy the iShares Silver ETF After Its 144% Rally in 2025? History Says It Could Do This in 2026.

Core Viewpoint - China has announced new export restrictions on silver, effective January 1, 2026, to protect its domestic supply chains and gain leverage in trade negotiations with other economic powers like the U.S. [1] Industry Overview - In 2024, industrial applications accounted for approximately 58% of silver demand, with the jewelry industry contributing 18%, while investors represented only 16% of total demand [2] - Silver is more abundant than gold, with about eight times more silver extracted annually compared to gold, and its practical applications drive demand [3] Market Dynamics - Silver prices surged by 144% in 2025 due to fears of a global supply shortage stemming from China's export restrictions, alongside increased investor demand driven by political and economic uncertainties [5][6] - The U.S. government faced a $1.8 trillion budget deficit in fiscal 2025, raising national debt to $38.5 trillion, which has led investors to seek precious metals like silver as a hedge against further devaluation of the U.S. dollar [8] Investment Considerations - Historical data suggests that silver has delivered a compound annual return of only 5.9% over the past 50 years, indicating that expectations for another significant price increase in 2026 should be tempered [9] - Silver is known for its volatility, having experienced significant price declines after previous rallies, and any changes in China's export policies could lead to sharp corrections in silver prices [10] Investment Vehicles - The iShares Silver Trust (NYSEMKT: SLV) is an ETF that tracks silver prices and offers a convenient alternative to physical silver, with an expense ratio of 0.5% [4][12]