Background: The Current Silver Price Development
The silver price is in an extraordinarily volatile phase in mid-July 2025. After massive short sales aimed at pushing the price down, the market has surprisingly recovered quickly and now shows an explosive upward movement. The price is approaching the psychologically important $40 mark per ounce – a level not reached in many years.
Causes of Price Dynamics
Supply Shortage and Structural Demand: Silver has been suffering from a supply deficit for the seventh consecutive year, while industrial demand – particularly from the solar, electronics, digitalization, and defense sectors – remains at record levels. These structural factors create a long-term bullish foundation for the price.
Monetary Policy Signals: The U.S. Federal Reserve (Fed) signals interest rate cuts for the second half of 2025. This depresses government bond yields and makes precious metals like silver more attractive. At the same time, the U.S. dollar is weakening, providing additional tailwind for the silver price.
Geopolitical Uncertainties and Tariffs: Political uncertainties – such as potential import tariffs on raw materials or warnings of new sanctions against Russia – increase the flight to safe havens like silver. Anticipatory effects ahead of possible tariffs further boost demand.
Market Technical Factors: After a panic sell-off in spring, the market stabilized around $28. Since then, there has been a significant recovery, with initial price targets at $40 per ounce. There are already signs of scarcity of physical silver at major reserves (LBMA, COMEX), leading to higher prices and increasing borrowing costs.
Impact on Private Investors and Savers
High Volatility as Risk and Opportunity: The extreme volatility of the silver price brings both opportunities and risks. Short-term declines can result in losses; at the same time, strong upward trends also offer attractive profit opportunities.
Uncertainty due to Macroeconomic Factors: Private investors must contend with a variety of influencing factors: Fed’s monetary policy, dollar exchange rate developments, geopolitical tensions, and changes in industrial production. These uncertainties complicate long-term planning.
Physical vs. Paper Silver: Scarcity of physical silver may lead to paper products (ETFs, etc.) no longer being fully backed by actual metal. This increases the counterparty risk for investors in derivatives or ETFs.
Forecast: What’s Next?
- Short-term: The price could continue to rise towards $40; a consolidation phase after reaching this level is likely.
- Medium-term: Analysts see potential for further increases by the end of the year; sideways phases are possible.
- Long-term: If the breakout scenario continues, new all-time highs above $50 per ounce by 2030 could be possible – depending on supply/demand dynamics and macroeconomic developments.
Conclusion
The current price increase in silver is the result of a combination of structural shortages, high industrial demand, and monetary policy support through declining interest rates.