Core Insights - The precious metals market has seen significant gains this year, with silver emerging as a standout performer, reaching a peak of $53.579 per ounce on October 14, marking a new historical high since 1980, before settling at $51.98 per ounce, reflecting a cumulative increase of over 12% for the month [1] - Gold also performed well, surpassing $4,179 per ounce, with a year-to-date increase of over $1,500 per ounce [1] - Year-to-date, silver has risen over 81%, outpacing gold's 57% increase, with a notable surge of over 35% since the end of August [1] Market Drivers - The recent surge in silver prices is attributed to both its financial and industrial properties. Financially, the onset of a Federal Reserve rate cut cycle and ongoing geopolitical risks have enhanced silver's appeal as a currency and safe-haven asset [1] - On the industrial side, the explosive growth of the solar energy sector has significantly increased demand for photovoltaic silver paste, while a persistent shortage in global physical silver supply has widened the supply-demand gap [1] Market Liquidity and Trends - The liquidity issues in the London market have further exacerbated the rise in silver prices. As the global physical silver trading hub, London has experienced tightening liquidity, with silver stocks in London vaults dropping to 24,581 tons by the end of September, a decrease of 0.3% from August and at a multi-year low [2] - The surge in silver prices has led to a historic short squeeze in the London market, resulting in a significant reduction in market liquidity and an increased price spread between London and New York silver markets [2] Future Outlook - Market opinions on the future of precious metals are divided. Some analysts believe that the overall strength of the precious metals market will continue due to evolving global dynamics and loose monetary policies, with silver's future performance being closely watched. Although there may be short-term pullback risks, prices are expected to rise further next year [2] - Conversely, Goldman Sachs has advised caution regarding silver's rise, noting that the silver market is only about one-tenth the size of the gold market and lacks structural support from central banks. The volatility of silver is significantly higher than that of gold, and any short-term outflow of investment funds could lead to substantial price fluctuations, highlighting the short-term downside risks [2]