It simply soared.
That was the case in early 2004, in early 2006, and in late 2007 / early 2008.
The same kind of super-bullish indication came from the backwardation that turned back into contango.
In the above paragraphs, I wrote about this from the technical point of view. But the shift is more of a fundamental nature. I’ve been a fan of silver from the long-term point of view for literally decades. If you look at my previous articles, you won’t find a single piece where I wrote that silver was a poor investment from the long-term point of view.
I did expect that we’ll get a big decline before silver takes off, and I now think that the market has proven me wrong in that regard. We can still get it if stocks slide, but… We might as well get a decline to $50 from $75 or so and not a decline from the current price levels to $25 – $30.
Physical Squeeze Still Lurking
The physical squeeze in silver is a real threat, and we saw some of that just weeks ago. Plus, I literally wrote a book on silver’s fundamental case, so there’s no point in repeating the thesis. Still, I want to emphasize that the vast majority of those 100 reasons are silver-specific – they don’t apply to gold nor gold mining stocks (and GDXJ is primarily about gold miners).
Some concerns that you might have:
- Can Silver reverse here at 59-60 and reverse hard.
Yes, it can. The breakout itself, analogy to previous similarly-important breakouts, and the move from backwardation to contango suggest that even higher prices are more likely.
- Can all the Silver ETF puke and unload a significant amount of silver into the market.
The ‘Silver Rising’ book covers this in the market structure section. ETF flows actually work both ways. In H1 2025, silver ETPs saw 95 million ounces of net inflows, bringing global holdings to 1.13 billion ounces. The iShares Silver Trust (SLV) alone showed over $1 billion in net inflows over the past year. And here’s what’s interesting: European silver ETFs showed dramatic expansion while US products experienced outflows. The WisdomTree silver ETF (PHAG) expanded by 68.2% in March 2024 alone, requiring 2,614 tonnes of additional backing. Could ETFs liquidate? Sure. But who’s buying that metal? Industrial users need physical silver regardless of ETF flows, and they consumed a record 680.5 million ounces in 2024.
- China is in over production of EVs and Solar panels relative to market demand could China cut EV and Solar panel production immediately to a balance market condition?
Even if China slowed production tomorrow, it wouldn’t kill silver demand. Here’s why:
The demand isn’t coming from China, it’s coming from government mandates worldwide. The US Inflation Reduction Act commits $369 billion to clean energy (projected to reach $786B-$1.2T due to uncapped tax credits). The European Green Deal mobilizes €1 trillion. China’s own 14th Five-Year Plan targets 1,200 GW of renewable capacity by 2030. These aren’t optional market purchases that disappear in a recession. They’re legally mandated spending that continues regardless of economic conditions.
Plus, supply chains are already diversifying away from China. Vietnam’s solar export share rose from 8% to over 10%, India’s from near zero to 3%. If China cuts back, other countries fill the gap.
And here’s the kicker: even if solar installations stayed flat, silver demand would still grow. N-type solar cells (TOPCon/HJT) now hold 70% market share and require 57-100% more silver per cell than traditional panels. The technology transition alone increases consumption.
Getting back to the technical discussion, the USD Index could bottom soon, or the bottom could already be behind us.