Silver’s price surge is drawing parallels to meme stock frenzies, with its spot price more than quadrupling in the past year and surging 89 per cent since the start of 2024. At one point, the price spiked 16 per cent to $US116 an ounce before retreating. This volatility highlights the speculative environment in precious metals, particularly silver. While industrial demand from sectors like electronics and solar has contributed to the rise, analysts suggest a bubble is forming, driven by retail investors and leveraged speculators. TD Securities notes that indicators of silver scarcity are easing, and industrial demand is slumping.
The momentum is fueled by growing fears that governments will erode the purchasing power of currencies by printing money and suppressing interest rates. Investors are seeking hard assets like gold and silver to hedge against this debasement. This fear has been heightened by concerns about the independence of the US Federal Reserve and potential currency interventions by Japanese and US authorities.
Goldman Sachs recently raised its gold price target for December 2026 to $US5400 an ounce, while veteran strategist Ed Yardeni projects $US6000 by year-end and $US10,000 by the end of 2029. A Bank of America survey indicates that many investors believe gold is overvalued, yet the bull case persists due to debasement, debt, and geopolitical risks. Michael Hartnett, strategist at Bank of America, notes that gold bull markets have historically seen price surges exceeding 300 per cent, suggesting further potential upside.
Hartnett suggests potential triggers for the end of the rally include a truce between China and the US, central banks revaluing gold reserves, or the Federal Reserve raising interest rates in response to a second wave of inflation. Until then, the precious metals rally, while appearing manic, may continue its upward trajectory.
