Silver has stolen the spotlight in this year’s precious-metals rally, soaring more than 70% and leaving gold’s 50% gain behind.
On Monday, silver extended its run in early global trading, touching a record of $51.38 per ounce, according to LSEG data.
Gold also hit a record, climbing to around $4,060 per ounce after last week’s run above $4,000, driven by expectations of Federal Reserve rate cuts and safe-haven demand.
The latest bump in both metals came after President Donald Trump reignited a trade war with China by announcing an additional 100% tariff on imports from China.
The tariff shock added fuel to an already hot market. But in a note on Sunday, Goldman Sachs analysts urged caution over silver’s rally. They said the white metal is likely to continue posting gains in the medium term due to likely Federal Reserve interest rate cuts.
“However, in the near term, we see significantly more volatility and downside price risk for silver than for gold, which is the only commodity supported by a structural central-bank bid,” wrote the analysts.
When gold broke away
Silver and gold prices have historically moved in tandem, but that relationship has shifted in recent years, largely because central-bank buying has pushed gold higher.
Silver, by contrast, is more cyclical due to its industrial uses — such as in solar panels — which makes it less reliable as a hedge, according to Goldman’s analysts.
“Silver lacks the institutional and economic profile that supports gold. Silver is not recognized under IMF reserve frameworks, and has no material presence in modern central bank portfolios,” wrote the analysts.
The analysts also dismissed the idea that high gold prices could prompt central banks to switch into silver instead.
“Central banks do not manage weight — they manage value. Gold reserves are held passively and are not used operationally,” they wrote.
That means even if gold prices climb, policymakers don’t seek cheaper substitutes. They simply hold fewer ounces to keep the same dollar value on their balance sheet.
Gold’s physical traits also make it far more practical as a reserve asset. It’s about ten times scarcer than silver, 80 times more valuable per ounce, and twice as dense — qualities that make it easier to store, transport, and secure.
“A $1 billion holding in gold fits in a suitcase; the same value in silver fills a full-size freight truck,” the analysts added.
A smaller pond with bigger waves
Without a central-bank bid to anchor silver prices, “even a temporary pullback in investment flows could trigger a disproportionate correction,” the analysts warned.
That’s partly because the silver market is roughly nine times smaller than gold’s, meaning every dollar of inflow packs far more punch.
That dynamic has been on full display in recent weeks: Silver prices have jumped more than 35% since late August.
The surge was further exaggerated by a liquidity squeeze in London — the global hub for physical silver trading — after inventories there dropped to multi-year lows.
In Goldman’s view, silver behaves like a turbocharged version of gold. When investors pile into precious metals as a hedge against macro risk, silver tends to outperform. But when sentiment turns, it tends to crash harder.
“Without a central bank bid to anchor silver prices, even a temporary pullback in investment flows could trigger a disproportionate correction, as it would also unwind the London tightness that drove much of the recent rally,” they wrote.
