"Silver Surges Over 100% This Year, Outpacing Gold... Silver Banking Booms"

Silver Price Surpasses $60 per Ounce for the First Time Ever
Silver Banking Balances Quadruple in Just One Year

As international silver prices surge, a significant influx of capital is flowing into silver banking, a representative method of silver investment through banks. In particular, as the sale of silver bars has been suspended due to supply and demand issues, attention is shifting toward alternative investments instead of physical silver. Expectations that silver prices will continue to rise are also fueling increased demand for silver investment.

Yonhap News Agency

According to the New York Mercantile Exchange on December 12, international silver prices closed at $61.03 per troy ounce on December 10 (local time). After closing at $60.84 per ounce on December 9-surpassing the $60 mark for the first time ever-prices have continued to climb steadily. On December 11, silver even reached the $62 level. At the beginning of the year, silver was trading at around $28 per troy ounce, meaning prices have soared more than 100% this year alone. This far exceeds the approximately 60% rise in gold prices over the same period.

The rise in silver prices is attributed to factors such as the U.S. Federal Reserve's interest rate cuts and demand outpacing supply. On December 10, the Federal Reserve lowered its benchmark interest rate by 0.25 percentage points. This marked the third rate cut this year and the third consecutive cut. Typically, when benchmark interest rates fall and the value of the dollar declines, investor preference for safe-haven assets such as gold and silver increases.

Supply-demand imbalances are also driving up silver prices. In China-the world's largest producer and consumer of silver-silver inventories continue to decline, intensifying concerns about supply shortages in the silver market. In particular, demand for silver in industries such as electronics and solar power continues to rise steadily, but mine production has not kept pace, further exacerbating the supply shortage.

With supply falling far short of demand, the sale of silver bars has also been suspended. Since October 20, the sale of silver bars through commercial banks has been temporarily halted.

Given these circumstances, silver banking-an alternative investment method to physical silver-is attracting attention. Launched in August 2015, Shinhan Bank's "Silver Issue" is the first and only silver account product among commercial banks, allowing investors to purchase silver in gram units without physical delivery. The number of "Silver Issue" accounts stood at 16,958 at the beginning of this year. Over the past two years, the number of accounts had increased by only about 400-500, but this year it has surged sharply to 25,050 as of December 10. That is an increase of nearly 10,000 accounts in just one year. The account balance has also steadily grown from 4.77 billion won at the start of the year to 16.85 billion won, a fourfold increase in one year.

Experts believe that, given the global outlook for physical silver supply and demand, silver prices are likely to remain strong into next year. NH Investment & Securities has raised its forecast for next year's silver price range from the previous $40-60 per ounce to $45-70 per ounce.

Hwang Byungjin, a researcher at NH Investment & Securities, said, "As the Federal Reserve's easing monetary policy has led to a weaker dollar, the price of silver, a tangible asset, has strengthened. Next year, while some profit-taking may occur amid concerns about the rapid pace of record-breaking silver price increases, we see the potential for silver to reach an all-time high real value of $70."

Hong Sungki, a researcher at LS Securities, stated, "Silver prices have soared more than 20% over the past two months. While silver, as an alternative investment to gold, has benefited from increased demand for gold investment, its smaller physical market size compared to gold, industrial demand, and inventory accumulation due to U.S. tariff policies have all continued to drive up silver prices, ushering in a phase of heightened volatility."