Silver prices last Friday through the roof high $79 (£58) an ounce an all-time. It’s a stunning increase and an astonishing leap from $56 at the start of December. Demand for silver is skyrocketing. This boom is driven by its critical use in electrification, solar power panels, EVs, and data centers. Precious metals are ripping because market expectations for aggressive interest rate cuts by the Federal Reserve in 2026 continue to soar. This rapid change is causing investors to increasingly turn to hard assets, such as silver.
As you may have noticed, silver prices have spiked sharply this December. They increased from an average of just $29 per ounce in early 2025. This recent rally is therefore not just a fad but is being supported by this acute supply-demand imbalance. Meanwhile, manufacturers are racing for available metal in a tightly-supplied market still roiling from tariff/2306-related shocks. At the same time, this increasing demand for silver has many industry leaders sounding the alarm.
Elon Musk expressed his apprehension regarding the situation, stating, “This is not good. Silver is needed in many industrial processes.” His comments bring attention to the major backlash that manufacturers may experience as they work to maneuver through the increasing costs tied to silver.
New restrictions on exports of silver from China, the world’s largest supplier, go into effect on January 1 — making that landscape even more perilous. A significant amount of the world’s available silver currently resides on deposit in New York. It’s pending the outcome of an investigation by the U.S. Commerce Department. This uncertainty has led buyers to panic and grab their supplies. Consequently, prices are surging in advance of the new rules taking effect.
Tony Sycamore, a market analyst, elaborated on the factors driving this surge: “The rally in precious metals has been supported by expectations of multiple Fed rate cuts in 2026, alongside robust central bank and private investor buying. The dominant driver of late has been a severe structural supply-demand imbalance in silver, sparking a scramble for physical metal.”
Renewable energy industries are looking to silver like never before for groundbreaking solutions and technologies. In a market where demand far outstrips supply, increasing prices may do more harm than good. Yet manufacturers will likely encounter serious hardship during their transition from the old markets to the new.