Silver Is Soaring. Why the Rally Has Legs.

A former silver mine. (PATRICK HERTZOG/AFP via Getty Images)

Key Points

• Silver futures rose 1.5% on Monday to an all-time high of around $58 an ounce, based on data since 1972.
• Silver prices have nearly doubled this year, marking the best performance since 1979, when prices more than quintupled.
• Analysts suggest the rally may continue, driven by healthy retail demand, reserve allocators, and short-term momentum buyers.

While it was shaping up to be a shaky day for the stock market, over in the world of silver the news was a lot shinier.

Continuous-contract futures tracking silver prices jumped 1.5% on Monday and were trading around $58 an ounce, an all-time high based on available data back to 1972.

Created with Highcharts 9.0.1Silver pricesSource: FactSetNote: continuous futures contractAs of Dec. 2, 3:38 p.m. ET

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Silver prices have rallied for five straight days, with this being the best five-day stretch since August 2020. Prices have almost doubled so far this year in what would be the best performance since 1979, when prices more than quintupled amid the historic attempt by the Hunt brothers to corner the silver market.

“Where it goes next is anyone’s guess,” David Morrison, an analyst at broker Trade Nation, wrote in a Monday note, adding that outsize gains on Friday came amid poor liquidity in markets amid technical issues impacting silver futures traded through CME Group.

Michael Brown, a strategist at broker Pepperstone, suggested that the rally has legs, however—especially since the recent run-up could attract more retail investors to the metal, which is historically a volatile commodity.

“Retail demand is still clearly very healthy here, as is demand from reserve allocators seeking increased diversification,” Brown wrote in a Monday note. “Those Friday gains are also likely to encourage short-term momentum buyers to enter the fray once again. It is usually the case that one record high begets a few more, and that seems likely to ring true for silver.”

Write to Jack Denton at jack.denton@barrons.com