Precious Metals Melt-Up
Prices for gold and silver have skyrocketed over the past year. Gold prices have increased nearly 90%, and silver prices have increased by over 200%. There are several dynamics driving this meteoric price growth, including global central banks purchasing gold at record high levels, macroeconomic forces such as the weakening of the U.S. dollar, and industrial demand, especially for silver.
The demand for silver has been particularly interesting given its role as a critical industrial metal. Silver is a key material in products such as solar panels, electronics, defense equipment, electric vehicles, and data centers. Industrial uses make up more than half of total demand for silver. Supply is still struggling to keep up with increasing demand.
One especially fast‑growing source of industrial demand for silver is artificial intelligence technology. AI chips require metals that can handle extreme electrical and thermal loads. Silver has the highest electrical and thermal conductivity of any metal. It is being used in chip packaging, internal semiconductor connections, and various supporting components. As a result, AI data centers have become major consumers of silver, adding further pressure to global demand.
Further compounding the issue is China’s role in the silver market. China is one of the world’s largest producers of refined silver, controlling an estimated 60-70% of the world’s refined silver supply. Earlier this year they began enforcing new restrictions on exports. Starting on January 1, 2026, only large, state-approved companies can export silver (after obtaining special licenses). The new qualifying conditions effectively block hundreds of small and mid-size exporters, worsening the supply crisis. The timing of China’s regulatory changes has put immense stress on the silver market, which has been in a structural deficit for the past five years, eroding inventory around the world.
Unlike gold, silver is largely mined as a byproduct of other metal production, primarily copper, lead, and zinc, so miners cannot easily increase their supply. While silver recycling contributes roughly 180 million ounces annually, that figure has not grown in recent years, and starting a new mining project can take eight or more years to develop.
Last week saw a dip in the price of silver. That should not be taken as an indication of future price changes. Moreover, volatility is likely to persist. Such volatility tends to be a characteristic of the markets for precious metals.
If you do happen to have old jewelry, silverware, or collectibles tucked away, their value could be very different from when they first went into storage. Now would be a good time to do a quick sweep of the jewelry box or China cabinet. Any unused gold or silver can be sold to jewelers or dealers at a modest discount to the current price per ounce. You might be surprised to learn how much value is sitting in a drawer or safe deposit box!
Meghan Potter