Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Silver has jumped to $38/oz, driven by a wave of demand, tightening inventories, and rising geopolitical tensions. Prices are now up 35% year to date, with no signs of slowing. This latest breakout follows a burst of preemptive buying from investors concerned about President Trump’s new round of tariff threats targeting Mexico, the world’s largest supplier of physical silver. The rush in demand is running headfirst into a strained supply, with experts forecasting a global silver deficit continuing into 2025.
Silver Rally Gains Steam with 30% YTD Surge
Over the weekend, silver prices spiked to $38/oz, representing a nearly 30% year-to-date climb. This comes weeks after the shiny metal notched a 14-year high by crossing over the $35 hurdle, which had held down prices for years. These consecutive milestones suggest the silver rally is starting to pick up steam.
Trump’s Mexico Tariffs Spark Silver Rush
The recent surge in silver prices is partially driven by preemptive buying in response to Trump’s threat of 30% tariffs on most Mexican imports. Although the shiny metal is technically exempt from these import taxes, market participants are concerned about the administration widening the scope of its hardline trade policy.
Contributing nearly 25% of the globe’s silver supply, Mexico is a foundational part of the entire silver market. Rising trade tensions and the threat of disruptions or targeted tariffs were enough to spark elevated purchases. This defensive buying is helping to push prices higher even before any new trade barriers are implemented, underscoring the heightened fragility of international trade.
ETF Hoarding Drains Inventories, Borrowing Costs Soar
This sudden influx of silver purchases is putting noticeable strain on already thin inventories, even in major trading hubs like London. As investors pour into silver exchange-traded funds (ETFs), the pool of immediately available silver continues to shrink.
Since February, ETF inflows have increased by around 2,570 tons. These paper assets, designed to track the spot price of silver, don’t make their holdings available for borrowing or delivery. With dwindling silver supplies, the cost of borrowing silver has exploded to 6% (up from the usual 0%). The predictable result has been a strong surge in prices.
Silver’s Dual Investment Demand
The combination of trade turmoil and dwindling supplies is colliding with sustained and rising demand. Silver’s unique role as both an industrial and investment metal ensures steady consumption regardless of broader economic conditions.
In the short term, its safe-haven appeal is attracting buyers amid rising geopolitical uncertainty and economic instability. On a broader scale, the expanding green energy sector is expected to drive long-term demand, especially in solar energy.
The Silver Institute projects that 2025 will mark the fifth consecutive year of global supply deficits, another factor supporting elevated prices despite near-term volatility.
Gold-to-Silver Ratio Signals More Room to Run
With gold prices consolidating around $3,300 and silver rising to near-term highs, the relative value gap between the two metals is closing. The gold-to-silver ratio, which measures how many ounces of silver equal one ounce of gold, has collapsed from nearly 100:1 to 86:1.
This steep 14% drop still hasn’t brought the ratio near the 10-year average of 80:1, signaling silver has more room to run. Assuming gold prices remain steady, the shiny metal would clock in at $41.25/oz–a nearly 6% bump from recent peaks. Yet, many experts hold 2025 silver price projections far beyond that.