The next commodity to break out? Silver breaks through $31 per ounce, hitting a more than ten-year high

On Friday, the price of silver broke through the important $30 per ounce mark for the first time in over a decade. With strong financial and industrial demand, silver has been rising more rapidly than gold, with buying momentum increasing. Silver has risen by about 30% this year, surpassing gold to become one of the best-performing major commodities of the year.

At 23:07 Beijing time on Friday, spot silver rose by 3.97% to $30.7498 per ounce, the highest since February 2013, while gold rose by 1.69% to $2417.02 per ounce. Subsequently, the silver price continued to rise, with COMEX silver futures closing up by 6.36% at $31.775 per ounce, spot silver closing up by 6.24% at $31.39 per ounce, continuously hitting new highs in 11 years.

Shanghai gold night trading closed up by 1.64%, Shanghai silver closed up by 6.02%, at $8061 per kilogram.

Although media headlines have mainly focused on gold, as gold has repeatedly set historical records this year, the actual more vigorous and faster rising is silver. After experiencing a relatively larger increase, silver is still relatively cheap compared to gold. Currently, it takes about 80 ounces of silver to buy 1 ounce of gold, while the average gold-silver ratio over the past 20 years has been 68.

Gold and silver, these two precious metals, largely move in sync as they both have similar macroeconomic and monetary characteristics. With the significant increase in global central bank gold purchases, rising interest from retail investors, and expectations of US interest rate cuts, the gold price has reached historic highs, and silver has risen as well.

It should be noted that although investors are not very interested in silver ETFs, physical gold sales have rebounded. Some industry insiders point out that the current situation is that even customers interested in buying gold are starting to say, well, maybe I will buy silver first and then wait for the gold-silver ratio to rebalance.

The silver market is much smaller than the gold market, and the trading volume of silver futures contracts is larger relative to its annual physical supply, similar to the cocoa market which showed extremely strong performance earlier this year, making it susceptible to speculative activities and market sentiment, leading to sharp price fluctuations. Looking back to the late 1970s to early 1980s, there was the well-known Hunt Brothers silver squeeze event.

In the face of the rising trend of silver, analysts' views are cautious:

• UBS pointed out in a research report that as many investors feel unprepared for the speed and magnitude of the rise in gold prices, silver now provides an opportunity for investors to catch up. While the supply and demand for silver itself is indeed tight, it is not enough to support a sharp rise in silver prices. However, in the situation of soaring gold prices, silver, as a cheaper and more volatile alternative to gold, naturally attracts investors' favor
• HSBC expects global demand for silver coins and bars to decline, as many retail investors have purchased a large amount of silver coins and bars in the past few years and currently have little interest in further increasing their holdings. The high silver price has led to more silver coins and bars flowing into the secondary market, reducing the demand for newly minted silver coins and bars. Although global inflation still exists, it is gradually easing. The outlook for silver demand in the jewelry industry is not optimistic. Silver supply is less than demand, playing a role in preventing a sharp decline in silver prices, but it is not enough to support a long-term bull market