White Metal Reaches Historic Peak: What's Driving Silver Beyond US$60?

Silver just hit a remarkable milestone, surging past US$60 per ounce to claim a new all-time high on December 9. This breakout didn’t happen overnight — it represents the continuation of a rally that kicked off on November 28, when a trading disruption at CME Group’s infrastructure sparked market-wide concerns and inadvertently highlighted the fragility of current market systems.

The Fed Factor: Rate Cuts on the Horizon

The most immediate catalyst for precious metals strength is the shifting expectations around Federal Reserve monetary policy. With the central bank’s December meeting concluding on December 10, market participants are now pricing in strong probabilities of another interest rate reduction. This represents a significant shift from earlier sentiment when the market was genuinely split on whether further cuts were coming.

Why does this matter for silver? Lower interest rates typically make non-yielding assets like precious metals more attractive to investors. The yield trade becomes less compelling, redirecting capital toward hard assets that historically serve as inflation hedges and stores of value.

Leadership Speculation and Policy Direction

The narrative around Fed leadership is adding another layer to this story. President Trump indicated on November 30 that a decision has been made regarding the next Federal Reserve chair, and multiple sources have suggested that Kevin Hassett, currently directing the White House’s National Economic Council, is the frontrunner for the role.

This matters because Trump has been consistently vocal about his preference for a Fed that cuts rates more aggressively. Hassett’s potential appointment signals the possibility of a more accommodative monetary stance going forward — a scenario that historically supports precious metals valuations.

Silver’s Outperformance Story

Here’s where things get interesting: silver is currently outpacing gold in 2025 gains, with the white metal up approximately 100 percent year-to-date compared to gold’s roughly 59 percent advance. Gold itself is trading above US$4,200 per ounce but hasn’t reached its historical peak, while silver has shattered previous records.

This reversal is noteworthy because silver typically lags gold in bull markets before staging dramatic catches up. The fact that it’s currently leading suggests either exceptional strength in silver specifically or broader expectations of volatility that favor the more reactive metal.

Supply Dynamics Creating Pressure

Beyond monetary policy, the supply-demand equation is tightening significantly. Chinese silver stockpiles have fallen to their lowest level in a decade following massive exports to London, according to data from November. This inventory squeeze is occurring simultaneously with tariff uncertainties and a newly elevated status for silver as a critical mineral in the US — both factors that should provide structural support to pricing.

The industrial dimension shouldn’t be overlooked either. In 2024, industrial demand for silver reached a record 680.5 million ounces, driven by applications in grid modernization, electric vehicle manufacturing, and solar panel technology. Despite overall demand being down 3 percent year-on-year, supply constraints mean the market still experienced a deficit of 148.9 million ounces — the fourth consecutive year of undersupply.

What Comes Next?

Market participants are actively debating whether silver’s outperformance extends into 2026. According to Jay Martin of VRIC Media, the precious metals cycles typically see gold deliver the stable returns while silver generates the exceptional gains — a pattern he expects to repeat in the current cycle.

The convergence of accommodative Fed expectations, supply constraints, and industrial demand growth suggests the narrative for white metals remains constructive heading into the new year.