Silver has jumped more than 70% in the past year, rising along with gold as investors seek safety and an inflation hedge in precious metals. Silver was trading at about $51 per ounce in the London spot market Friday, down from its all-time high above $54 in October.

The metal is used in jewellery‭, ‬but it also is very important in industrial applications which are growing‭. ‬For instance‭, ‬it is‭ ‬used in the manufacture of electric vehicles‭, ‬electronics‭, ‬solar panels and in medical devices‭.‬

“Silver has predominantly been driven by a substantial increase in ETF flows‭, ‬so that makes it a little vulnerable to further price correction‭,‬”‭ ‬said Suki Cooper‭, ‬head of global commodities research at Standard Chartered‭. ‬“But beyond the first quarter of next year‭, ‬we think it will regain upward momentum and test fresh highs into the year end‭.‬”

ETFs are exchange traded funds‭. ‬Investors can gain different types of exposure to the metal through such things as silver ETFs‭, ‬mining company equities‭, ‬mining company ETFs‭, ‬bars‭, ‬coins‭, ‬and also jewellery‭.‬

Cooper said she expects the metal to average‭ $‬50‭ ‬an ounce in the current quarter‭, ‬but climb to an average of‭ $‬57‭ ‬in the fourth quarter of next year‭. ‬On an annual basis‭, ‬she expects an average‭ $‬38.80‭ ‬per ounce this year and an average price of‭ $‬52.80‭ ‬next year‭.‬

Bank of America expects higher prices even though it sees an 11‭ ‬per cent decline in demand next year‭. ‬In October‭, ‬the firm forecast that silver could rise to as high as‭ $‬65‭ ‬an ounce in 2026‭, ‬and average a price of‭ $‬56.25‭ ‬across the year‭.‬

The US government last week declared silver to be a critical mineral‭, ‬raising speculation for new tariffs on the metal as the it‭ ‬encourages more domestic production‭. ‬The US currently imports about two-thirds of the silver it consumes‭.‬

“It does not change the price outlook‭,‬”‭ ‬said Cooper‭. ‬She said the market was widely expecting the classification of silver as a critical mineral‭. ‬The market is now awaiting news on potential US tariffs‭, ‬but silver has already received some exemptions‭.‬

Fear of tariffs has already led to turbulence in the silver market‭. ‬Inventories in the US were building all year on speculation‭ ‬the metal would be tariffed‭. ‬That supply shift peaked in early October‭. ‬

That coincided with heavy demand from ETFs and more buying from India ahead of Diwali‭. ‬

That demand contributed to temporary shortages in London and a price squeeze in a very tight market‭. ‬London is the largest storage centre for silver‭. ‬But supplies have since returned to London vaults at a historic pace in recent weeks‭.‬

Bart Melek‭, ‬global head of commodity strategy at TD Securities‭, ‬said he expects these type of squeezes to become a more frequent‭ ‬phenomena in the next couple of years‭. ‬The squeeze in October was due to supply being in the wrong place‭, ‬but the market is also in deficit‭. ‬He said the market is 100‭ ‬million ounces in deficit this year and could be in deficit by the same amount in 2026‭.‬

‭ ‬“The move towards‭ $‬55‭ ‬was very much because we drained liquidity form the LBMA market and there was a squeeze‭. ‬Now we're seeing the‭ (‬arbitrage‭) ‬go the other way‭,‬”‭ ‬he said‭.‬

Melek said another reason prices eased after October's record high is that more metal became available‭. ‬

“We're seeing metal from Asia‭, ‬typically byproduct metal from the smelting of copper‭, ‬zinc and others that normally would get all absorbed locally‭,‬”‭ ‬he said‭. ‬“It's looking for a home in India and some of it is no doubt making it onto the LBMA‭ (‬in London‭), ‬meaning that's relieving the pressure and that's why prices are moving down‭.‬”

Since ETFs have been a big driver of price this year‭, ‬Cooper said investors should be aware of the impact of flows into and out‭ ‬of the funds‭.‬

“We have seen quite sizeable redemptions‭,‬”‭ ‬she said‭, ‬adding that the flows can move swiftly in either direction‭.‬

She said the ETFs are popular with retail investors and that group‭ ‬“tends to be more nimble in terms of the flow‭. ‬You can see quite sizeable redemptions materialising‭, ‬and in October‭, ‬we're already down 480‭ ‬tons‭, ‬but for the year-to-date we're still up 3,000‭ ‬tons‭.‬”

High prices can also trigger demand destruction‭, ‬or reduced demand from industrial users who can switch to other metals or combinations of metals‭, ‬including nickel‭, ‬copper and aluminum‭.‬

Marc Chandler‭, ‬chief global market strategist at Bannockburn Global Forex‭, ‬said it is not clear whether the US will impose new tariffs on silver or not‭. ‬He points out that the US has put tariffs on aluminum from Mexico and Canada‭, ‬so there's the potential for some type of tariffs to be placed on silver‭. ‬Mexico and Canada are the biggest suppliers to the US‭.‬

“Silver is up because of this and partly because of gold”‭ ‬prices‭, ‬said Chandler‭. ‬“The chart looks bullish‭. ‬The trick is we've never been at these levels before so it's hard to know how high it can go‭.‬”

Cooper said the trading dynamic around silver has changed‭. ‬

“Silver's been interesting in that in the last couple of years‭, ‬it's followed in the footsteps of copper more closely‭,‬”‭ ‬she said‭. ‬“But we have a market that's been severely undersupplied for the last few years‮...‬‭ ‬There's plenty of above ground stock‭, ‬it's not necessarily resulted in higher prices‭. ‬So there are a few dynamics that shifted this year that enabled it to move higher‭.‬”

Silver‭, ‬along with gold‭, ‬has benefited from weakness in the US dollar‭, ‬stemming from concerns about fiscal deficits and climbing‭ ‬debt‭.‬

“Longer term‭, ‬we continue to like it‭,‬”‭ ‬Melek said‭.‬

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