Silver Reaches 14-Year High, Heading Toward $50/oz on Supply and Demand Drivers

Silver prices surged in both local and global markets today, Thursday, hitting a new 14-year peak. The metal touched $45 per ounce, driven by several factors, including a weaker dollar, rising industrial demand, and expectations for U.S. monetary policy.

According to a report from "Safe Haven" Research Center, the price of 800-purity silver in the local market reached 58 Egyptian pounds (EGP), a one-pound increase from yesterday. Meanwhile, 999-purity silver was 72 EGP, and 925-purity silver was around 67 EGP. The price of a silver pound (925-purity) remained stable at 536 EGP.

Globally, the price per ounce rose from $44 to $45 amid growing bets on a continued U.S. interest rate-cutting cycle, which has boosted the appeal of non-yielding assets like silver.

The report noted that silver's touch of $45 per ounce is its highest level in 14 years, with investors now focusing on the historical target of $50. Despite these strong gains, experts believe the current rally is still in its early stages and that silver has the potential to surpass its all-time highs.

Key Drivers of the Surge

1. Weak U.S. Dollar and Monetary Policy Expectations

A weaker dollar is a key factor pushing silver prices up, as investors turn to precious metals as a safe haven to hedge against currency fluctuations. However, Federal Reserve member Austan Goolsbee warned against excessive rate cuts, citing the continued strength of the U.S. labor market, which could limit the momentum of precious metals.

2. Growing Industrial Demand, Especially in Solar Energy

Industrial use, particularly in electronics and photovoltaic (PV) solar cells, is one of the main drivers of silver demand. The price increase is linked to a growing appetite for the metal from the renewable energy sector, with increasing adoption in modern technology applications.

3. Supply Deficit and Tightening Market

The report indicates that a supply deficit, resulting from low mine production relative to high demand, is now clearly affecting prices. The silver market has seen a cumulative deficit of approximately 800 million ounces over the past five years, with this year's deficit alone expected to reach 187 million ounces.

Challenges and Risks

U.S. Monetary Policy Fluctuations: Any sudden tightening or new rate hike could reduce silver's appeal.

Supply Market Changes: An increase in production or a significant recovery of scrap silver could ease price pressures.

Industrial Demand Volatility: A slowdown in the technology or renewable energy sectors could lead to a decline in demand.

Silver's Role in the Global Economy

The report emphasizes that silver has become a pivotal element in the global economy, not just as a safe-haven investment, but also as a fundamental component in the new industrial infrastructure, especially with the accelerated transition to clean energy. Industrial use—particularly in electronics and electric vehicles—is the largest driver of demand for the metal.

It added that emerging markets like India are leading the demand for solar energy as a low-cost alternative, which is increasing global silver consumption.

Shifting Global Economic Patterns

The report points out that countries are seeking to build domestic reserves of vital metals, including silver. This adds additional costs to markets and further complicates the supply and demand landscape.

Comparisons with Gold

The report showed that silver has recently outperformed gold in terms of price growth. The gold-to-silver ratio has fallen to 85.16, indicating that silver prices are rising at a faster pace. This indicator is often seen as a sign of increasing investor risk appetite, as silver is considered a more aggressive bet on economic growth than gold.

Additional Drivers of the Rally

U.S. Monetary Policy: Last week, the Fed cut interest rates by 25 basis points to a range of 4.00%–4.25%, with expectations of further cuts before the end of the year.

Declining Bond Yields: This makes non-yielding assets like silver more attractive.

Safe-Haven Demand: Geopolitical tensions, particularly the Russia-Ukraine war, have boosted demand for both silver and gold.

At its highest level in 14 years, silver is at the beginning of a new rally cycle driven by a supply deficit, rising industrial demand, and the global shift toward renewable energy. With its trajectory similar to palladium's rise years ago, the $50 per ounce ceiling may be closer than investors anticipate, making silver a focus of global attention as both a safe haven and an industrial investment.