Silver is in one of its ‘hottest bull markets of all time’

Amidst little to no media coverage, silver has been having a historic bull run in 2024. While most investors are much more familiar with gold’s role as a hedge and a safe haven, silver is even outpacing the returns that gold has seen over the past two years.

Let’s stop and take a look at the figures. The iShares Silver Trust (NYSE: SLV) is up 32.9% year-to-date (YTD) — outperforming gold by almost 6%. Looking at the last two years, silver has provided returns of nearly 80% — whereas gold has seen a 60% price increase in the same period.

In fact, if things keep going at this pace, silver will outperform some of its best years since the turn of the millennium — namely, 2009, when it rose by 47.6%, and 2020, when it rose by 47.5%. At press time, silver is currently up five times its average annual return YTD — in other words, 5 times the returns in three-quarters the time it usually takes.

The macroeconomic case for silver

Silver’s outsized returns are of particular interest when contrasted with the small amount of public attention it is receiving. 

What’s most notable is that the precious metal is exhibiting price action reminiscent of recession years — stoking fears in some that current gains are due to the silver market already pricing in macroeconomic woes yet to come.

However, there’s a strong case to be made that silver would, at worst, not fall as much as other assets — and at best, climb even higher.

For one, the Fed’s recent dovish moves — the first rate cut in 4 years, are bound to buoy investments at least somewhat. The effect will be all the greater if the Fed keeps cutting rates at a steady pace.

As an asset performing historically well, it’s almost a guarantee that silver would absorb some of the new funds directed at the markets.

On the other hand, should macroeconomic tides turn — silver’s role as a hedge against inflation and safe haven in recessions could also serve as bullish catalysts — although returns might revert closer to the mean. Still, with bonds on track for their worst performance in a century, this time around, things could be different.

Industrial demand for silver

The precious metal plays an increasingly important role in the green energy revolution. Already a key component in solar panels, which account for roughly 13.8% of silver production globally per the Payne Institute for Public Policy, a figure set to rise to 20% by 2030 according to trend projections, silver is also utilized in water purification systems and wind turbines. 

Recent innovations in EV technology, particularly Samsung’s 600-mile solid-state batteries, which require up to 1 kilogram of silver per car, could lead to thousands of metric tons in demand, especially if the technology sees widespread adoption

Notably, the bullish thesis for silver does have some public institutional support — Morgan Stanley, for example, lists silver, along with gold, nickel, and notably copper, as bullish investments. 

Meanwhile, the most advanced AI models currently available, notably Meta AI and ChatGPT 4o, forecast that prices will not drop below $30 unless a market-wide slowdown occurs.

All in all, silver seems like a low-risk play at the moment — with all external factors seeming to be on the bullish side of the aisle, at least for now.