Silver prices claw their way back to $73.50 an ounce on Tuesday, shaking off a bruising 7% drop after Monday’s wild ride to a record $85.87. What happened? Traders took profits—who wouldn’t after a run like that?—and the CME Group hiked margin requirements on silver futures. That move squeezed out some of the more aggressive bets, making leveraged investors back off. However, analysts still see this as a breather, not a sign that silver’s losing its momentum.
Strong Industrial and Speculative Demand
The fundamentals look strong. There’s not enough silver for solar panels, electronics, and data centers, which is driving demand and momentum. Those industries require the metal now more than ever. Add to all this the fact that supplies are tight — mines aren’t turning out as much of it, and so prices haven’t tumbled that far.
Then there’s China. The speculators are descending on silver, hoping to protect themselves from economic risk. Premiums on the Shanghai Futures Exchange just hit all-time highs, indicating demand is that hot. And that is giving the rest of the world a headache — Europe vaults in London and New York are running low, and the market is already feeling squeezed, in a way similar to the short squeezes we have seen before.
Geopolitical Tensions Fuel Safe-Haven Appeal
And to stoke the fire and give silver prices momentum, geopolitics does the trick. Word of strikes near Putin’s residence has increased tension in Eastern Europe, and the more such news flows, the more silver shines as a safe haven. The coming weeks will keep the Middle East on edge, with Saudi air strikes in Yemen and Iran touting a ‘full-scale war’ against the United States, Europe, and Israel. Trump’s threats to respond if Iran were to resume its nuclear program only pour salt in the wound.
Bottom line: Prices might fluctuate in the short run, but silver’s strong demand and its crisis-resistant image continue to keep it front and center. And as long as global tensions continue to bubble and industry continues to clamor for the metal, silver could make another run at the $80–$85 level before too long.
