Why silver prices surged, then dropped overnight

In a record weird year for the economy, the price of silver is the latest thing to behave strangely.

The price of the second fiddle precious metal has soared over the last month, hitting record highs and outpacing the growth of gold. After hovering between $15 and $25 an ounce for much of the last decade, the price of silver topped $40 an ounce this fall before spiking to a record high of $82 at the end of December. After topping $80 on Monday, silver fell back closer to $70 an ounce – still more than double what the metal was worth only a year ago.

Precious metals like silver tend to do well in times of economic uncertainty and 2025 has fit that bill and then some. Investors looking to insulate themselves from the The President administration’s chaotic economic choices turned to gold as a safe haven asset in 2025, sending the price of the top dog precious metal up. Like silver, gold’s price growth outstripped the stock market this year and hit new record highs. 

Long-awaited cuts to the federal interest rate, and future cuts on the near horizon, are also pushing the price of precious metals higher. Small time investors are getting in on the silver action, with amateur traders organizing on Reddit and plotting their moves like they did in the early heyday of meme stocks.

Silver’s price was already on the rise, but a looming change to Chinese trade policy may be sending silver even higher. At the start of the year, China will implement a new set of rules on its metal exports designed to “step up the protection of resources and the environment” in the country – a change that is sowing concerns about silver’s supply. China also plans to place more stringent restrictions on exports of steel and other metals in the coming year to address what it calls an “insufficient supply-demand balance” in the steel trade.

Silver isn’t just an investment 

Investors have flocked to silver over the course of the year, but the precious metal has many uses beyond holding its value over time. Silver has a wide range of applications and is used heavily in electric vehicles and solar panels – two areas that have boomed in recent years.

Given those applications, any change to the global silver supply is a cause for concern for Elon Musk, who leads EV maker Tesla. “This is not good. Silver is needed in many industrial processes,” Musk posted in a reply to a post about China’s policy change on X. After Mexico, China is the world’s second largest supplier of mined silver.

Silver features prominently in solar technology, where it is converted into a paste that coats solar cells. “When light strikes the silicon, electrons are set free and the silver – the world’s best conductor – carries the electricity for immediate use or stores it in batteries for later consumption,” global silver association The Silver Institute explains. In 2014, the solar industry accounted for only around 5% of global silver demand, a percentage that basically tripled a decade later. Data centers, currently an explosive area of investment for many major tech and AI companies, also rely heavily on silver and other metals.

Trade changes aside, silver is known as a riskier bet than its more valuable sibling metal. In October, analysts at Goldman Sachs warned that silver’s big 2025 rally might fizzle out and wasn’t likely to stay as steady as gold through its gains.

“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,” Goldman’s analysts wrote. “Silver lacks the institutional and economic profile that supports gold… Without a central bank bid to anchor silver prices, even a temporary pullback in investment flows could trigger a disproportionate correction.” 

Safe haven-seekers counting on silver’s winning streak may want to take note.

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