Breaking Out After Years of Suppression: "Gold Has Peaked, Now Silver Is the Hot Prospect" [Real Investment Technique]

Amid Gold Rally, Investors Turn to Silver
Market Outlook: "Further Upside Potential Remains"
'Micro Mini' Silver Futures to Launch Next Month
Beware of Rising Volatility... A 'Medium- to Long-Term' Approach Recommended

As gold prices hover near all-time highs and concerns about a market peak grow, investors are turning their attention to silver. Despite a sharp price surge, analysts believe there is still significant upside potential for silver, given its long-term undervaluation, structural background, and both industrial and investment demand. Some experts suggest that the silver market is entering what is being called a "new normal" phase.

"Silver Prices Were Suppressed for Decades" - Why Is a Silver Rally Expected?

According to the financial investment industry on January 28, Samsung Futures stated in a report released this month that the silver market is moving out of its previous price structure and entering a new equilibrium range-a so-called new normal phase. The report noted, "It is reasonable to consider the expanded investment demand for silver, rather than gold with limited upside, as a new normal," adding, "Even after the recent sharp rally, silver prices remain at accessible levels." The report further commented, "Because silver prices were suppressed for decades, there is still considerable room for further gains."

This week, the spot price of silver surpassed $110 per troy ounce for the first time in history. Youngjoo Lee, a researcher at Hana Securities, explained, "Although silver price rallies have occurred in the past, this current movement is markedly different from previous cycles in terms of timing, speed, and magnitude," adding, "This shows that the underlying conditions driving the silver market have changed compared to previous cycles."

Samsung Futures identified seven factors behind the expected rise in silver prices in 2025: ▲ an increase in Chinese and Indian investors seeking silver as gold becomes more expensive ▲ preemptive buying in the United States due to the potential imposition of import tariffs ▲ a historic short squeeze caused by depleted silver inventories in London ▲ a sharp decline in Chinese inventories ▲ the U.S. government designating silver as a critical mineral ▲ a significant increase in industrial consumption driven by solar panel production ▲ and a fifth consecutive year of demand outpacing supply in a highly inelastic supply environment. The report concluded that these factors remain relevant this year.

Recent policy changes in China and the United States have also had a significant impact on the medium- to long-term trajectory of silver prices. Samsung Futures pointed to surging demand from China as the main driver behind the sharp rise in silver prices at the end of last year and the beginning of this year. China, the world's largest silver consumer, is seeing not only continued industrial demand but also a simultaneous increase in investment demand. In addition, the United States has designated silver as a critical mineral and is working to secure its supply chain, leading to a reassessment of silver as a strategic asset. Samsung Futures researcher Jihee Ok commented, "This is the beginning of another resource war," explaining, "China, as a supplier, is seeking to control resources, while the U.S., as a consumer, is trying to secure them-this dynamic is a key trigger for the current rally."

Moreover, the most important change in this cycle is the shifting nature of industrial demand for silver. Historically, silver has been used mainly in solar panel electrodes, high-conductivity contacts in power grids, data center servers and power connectors, and electrical systems in electric vehicles. Researcher Lee noted, "The spread of artificial intelligence (AI) and the expansion of data centers are driving massive investments in power infrastructure, which in turn structurally increases silver demand," adding, "Electrification and AI infrastructure are being promoted according to policy objectives and technology transition timelines, making it difficult to halt these trends even during economic downturns. Silver demand is moving toward a long-term structural trajectory."

Market participants are also paying close attention to the long-standing divergence in the relative value between gold and silver. Typically, gold is highly sensitive to financial market uncertainty and inflation-hedging demand, while silver is influenced by both investment and industrial demand. According to Hana Securities, the long-term average gold-to-silver price ratio over the past 25 years was about 86, but after the pandemic, this ratio has continued to widen, surpassing 100 in the first half of 2025. Researcher Lee explained, "This means that silver has remained undervalued for an extended period, as capital has concentrated in gold during times of crisis."

Forecasts for $150 by Year-End, but Volatility Warnings Remain

Currently, most market observers believe that while silver prices may experience short-term corrections and surges, the medium-term upward trend will persist. Samsung Futures projects that silver could reach $150 per troy ounce by the end of 2026, indicating about 60% further upside. Researcher Ok stated, "With ongoing geopolitical instability, such as the situation in Venezuela, and a series of risk-averse factors, it is difficult to counter the current upward momentum in silver prices."

From an investment environment perspective, accessibility for individual investors is expected to improve. The Chicago Mercantile Exchange (CME) will launch a "Micro Mini" silver futures contract in 100-ounce units starting February 9. This product, which significantly reduces the trading unit and margin requirements compared to existing silver futures, is aimed at retail investors. Previously, CME had launched a 1-ounce gold futures contract in January last year, following a surge in gold investment demand after Donald Trump was elected President of the United States.

However, since January 13, the CME has switched to a percentage-based margin system, which is expected to have a visible short-term impact. In this system, as silver prices rise, the required margin also increases, making it more difficult to enter new long positions. Researcher Ok warned, "When prices surge, additional margin is required, making investors vulnerable to margin calls and potentially slowing the momentum. The same applies to short positions, where higher prices mean higher margin requirements. This could lead to repeated cycles of corrections and surges, increasing volatility."

Byungkwon Hwang, a researcher at NH Investment & Securities, also stated, "The strength in silver prices is supported by the simultaneous rally in gold and copper," but pointed out that the already high margin requirements for futures are leading to a reduction in non-commercial investor long positions. He added, "Volatility is also on the rise," advising, "In the short term, investors should avoid reckless chasing of silver rallies."

From an asset allocation perspective, Hana Securities views silver as a medium- to long-term asset. Researcher Lee noted, "Silver acts as a safe haven when real interest rates and policy uncertainty increase, while ESG, electrification, and the expansion of AI infrastructure provide industrial demand-based price support. Rather than making short-term bets, it is more appropriate to approach silver as a medium- to long-term portfolio asset that complements portfolios in phases where policy and industrial transitions intersect."