Silver’s price hit $74.10 per troy ounce during early European trading on Friday. In 2025, silver’s value jumped by 148% due to limited supply, low stockpiles, and increasing demand. A weaker US Dollar has made silver cheaper for international buyers. Traders expect two more interest rate cuts from the Federal Reserve in 2026, which would reduce the cost of holding silver. The appointment of a new Fed chair could also lead to lower interest rates. Geopolitical tensions, especially between Russia and Ukraine, as well as issues with the US and Venezuela, have increased demand for safe-haven metals like silver. In China, rising speculative demand has pushed premiums on the Shanghai Futures Exchange to all-time highs, tightening global supply chains. Silver acts as a safe-haven asset and a medium of exchange. Its price is affected by factors like geopolitical uncertainty, interest rates, and the performance of the US Dollar, since it is priced in USD. Silver’s industrial demand, especially in electronics and solar energy, can cause price fluctuations. The economies of the US, China, and India play a big role in this. Silver usually follows the price movements of gold, with the Gold/Silver ratio showing how they compare in value. This ratio indicates whether silver or gold is considered undervalued. After the dramatic 148% rise in 2025, the current strength in silver may continue. The break above key technical levels shows there is still momentum among buyers. We are looking to use derivatives, such as call options or bull call spreads, to take advantage of expected price increases while managing risk. The Fed’s likely policies are a major force driving interest in non-yielding assets like silver. With more rate cuts expected and the possibility of a new Fed chair in May, we believe long-term call options that expire in the latter half of 2026 could be a smart way to bet on lower interest rates. This strategy aims to capture the potential effects of future monetary policy changes. The fundamentals also support a positive outlook for silver. Industrial demand for silver, particularly for solar panels and electric vehicles, grew about 22% in 2025. Additionally, COMEX registered inventories dropped below 30 million ounces for the first time since 2020, highlighting tight supply amid rising demand. We are keeping an eye on the Gold/Silver ratio for relative value insights. Currently, with gold around $4,400 and silver at $74, the ratio is about 59, much lower than the 21st-century average of around 68. This suggests that silver has outperformed gold recently, prompting us to consider pairs trades or to be cautious with new aggressive long positions. Speculative demand from China has surged, pushing Shanghai premiums to record levels, which reflects strong local buying pressure and is straining global supplies. This high volatility has made buying options more expensive, so we prefer strategies like credit spreads or covered calls to benefit from these elevated premiums. This method allows us to earn income while maintaining a positive yet cautious outlook.

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