Silver and the new Bitcoin

I remember when you couldn’t give silver away. Down more than 70% from its 2011 peak, it languished below $20 an ounce for years. It wasn’t until the post-Covid everything-rally that it finally sprang to life, briefly touching $30 before slipping back again. Mainly an industrial metal, silver simply lacked the appeal of its more illustrious golden cousin.

Then everything changed in the summer of 2024. As gold pushed decisively beyond $2,000, investors started to look at silver as the cheaper alternative. Prices moved through $45 and retested the highs last seen during previous speculative episodes. Most experienced traders expected a pullback. After all, we had been here twice before, and both times a dramatic crash ensued.

Instead, momentum took over. The reasons touted were that silver was added to the US critical minerals list, it was a hedge against a falling dollar and an increasingly erratic US trade policy. Margin debt rose sharply, retail investors piled in, institutional investors who tried to short silver were forced to buy it back at ever higher levels, and we hit an intraday high of $120 in January this year.

The most optimistic forecast I read suggested silver could one day reach $700. But when an Uber driver told me it was “the new Bitcoin”, I should have known it was all over. Sure enough, prices promptly corrected, shedding $40 in a mere two days. Where do we go from here? Who knows, but if you’re inclined to take a punt on silver at this stage, you might as well back Liverpool to win the league.