Is Silver’s Bull Run Entering Uncharted Territory?

Silber Preis XC0009653103

A significant shift in the geopolitical landscape is providing substantial momentum for silver. The metal's price surged past $78 per troy ounce following a flight to safety triggered by U.S. intervention in Venezuela. However, this event is merely one facet of a deeper narrative. Underpinning the market is a structural issue with long-term implications: China's tightening grip on global silver flows is exacerbating an already critical supply deficit.

The fundamental picture for silver is defined by a persistent imbalance. Mine production has stalled, failing to keep pace with voracious industrial consumption. Demand from the solar panel industry, electronics manufacturing, and electric vehicle sector remains robust. This has created a projected structural deficit for 2025 estimated between 118 and 149 million ounces. Reflecting its crucial role, the United States has now classified silver as a critical mineral, highlighting its importance beyond mere investment.

China's Strategic Export Squeeze

At the start of 2026, Beijing dramatically tightened export controls on precious metals, designating silver a strategic resource subject to strict state licensing. Only 44 companies received authorization for silver exports in 2026 and 2027. The consequence is that China now effectively commands 60 to 70 percent of the world's traded refined silver. This massive supply chain intervention coincides with the pre-existing tight market conditions, amplifying price pressures.

Signs of tangible physical scarcity are emerging, particularly in Asia. Premiums for physical silver are being paid in China and India for the first time in two months. Futures markets are also flashing warning signs, with near-term contracts trading at a higher price than later dates—a condition known as backwardation that typically indicates immediate shortage.

Geopolitical Spark Ignites Rally

Over the weekend, the arrest of Venezuelan President Nicolas Maduro by U.S. authorities sharply elevated geopolitical risks. President Trump stated the U.S. would "lead" Venezuela until an orderly political transition is completed. Markets reacted swiftly, with silver gaining nearly 4 percent on Monday.

The momentum has continued. The metal currently trades above $78, marking a 3 percent increase from the previous day's close of $76.51. Gains for the month now stand at an impressive 35 percent. For context, throughout 2025, silver recorded an advance of approximately 150 percent, significantly outperforming even gold, which rose 64 percent.

Monetary Policy Adds Further Support

Market participants are anticipating at least two interest rate cuts from the Federal Reserve within the current year. Minutes from the December FOMC meeting revealed growing openness to policy easing, provided inflation continues to moderate. Lower interest rates enhance the appeal of non-yielding assets like precious metals.

The U.S. Dollar Index, trading around 98.25 points, is showing mild weakness, providing an additional tailwind for silver-denominated prices. Attention now turns to the upcoming U.S. jobs report on Friday, which may offer further clues regarding the Fed's policy trajectory. With the metal having reached an all-time high of $83.62 in late December 2025, the central question remains: how much further can this rally extend?

Key Market Drivers Summarized:

• China now controls an estimated 60-70% of globally traded refined silver due to new export licenses.
• A structural supply deficit of 118-149 million ounces is forecast for 2025.
• Strong industrial demand persists from solar, electronics, and EV manufacturing.
• Expected Fed rate cuts are increasing the attractiveness of the zero-yield metal.