Unlike oil, high silver prices do not quickly trigger more supply because most silver is a byproduct of mining for other metals like zinc and copper. This inelastic supply, coupled with surging industrial demand from sectors like solar energy, creates a classic setup for a significant price squeeze and parabolic moves.
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As globalism dies and treasuries lose appeal, central banks are buying gold. The super-bull case for silver is that they re-adopt it as a reserve asset. Its critical role in energy production (solar) gives it a unique utility that gold lacks, making it attractive in a resource-scarce world.
Metals are uniquely positioned to perform across multiple economic regimes. They serve as a hedge against national debt and central bank irresponsibility, benefit from potential rate cuts and sticky inflation, and face a massive supply-demand shock from the AI and energy infrastructure build-out.
Establish a foundational, long-term position in physical precious metals first. This "bedrock" provides stability and conviction, allowing you to then make more tactical, risk-managed trades in leveraged but more volatile assets like gold and silver miners.
An acute supply squeeze in copper is imminent as massive U.S. imports create a severe inventory dislocation. With LME stocks dwindling to critical levels, J.P. Morgan predicts prices must spike to reverse the arbitrage and incentivize the flow of metal out of the U.S. to where it's more needed.
J.P. Morgan's bullish gold forecast isn't just about investor flight to safety. It's underpinned by inelastic mine supply failing to meet structurally higher demand from central banks, who can buy fewer tons at higher prices to maintain reserve targets, creating a strong floor for the market.
Following US policy moves, China is likely to expand its use of export controls on critical materials. Silver, essential for EVs, solar panels, and AI data centers, has been added to its list, signaling a willingness to leverage its supply chain dominance as a geopolitical tool against rivals.
Silver's indispensable role in high-growth solar panel manufacturing fundamentally changes its investment thesis from a negative-carry store of value to a productive asset. This demand for its use in green energy infrastructure effectively gives the metal a positive yield, creating an attractive positive convexity profile for investors.
For 50 years, commodity prices moved together, driven by synchronized global demand. J.P. Morgan identifies a breakdown of this trend since 2024, dubbing it the 'crocodile cycle,' where supply-side factors cause metals to outperform while energy underperforms, creating a widening gap like a crocodile's mouth.
Silver's investment case is structurally weaker and more volatile than gold's. It lacks a 'central bank anchor' to stabilize its price, operates in a much smaller and less liquid market, and is prone to technical dislocations like physical shortages in a specific location, such as the recent 'London squeeze'.
Beyond its traditional status as a precious metal, silver's price rally is increasingly fueled by its essential function in high-tech manufacturing. As a key material in semiconductor and AI supply chains, its industrial demand is creating a powerful new narrative for its value.
