Silver’s Rally Is the Biggest In Years. There’s More to Come.

An attendant holds a one kilogram silver bar at Conclude Zrt bullion dealer arranged in Budapest, Hungary, on Monday, Feb. 17, 2025. (Akos Stiller/Bloomberg)

Silver hasn’t risen this much since the year 2020—and by one metric it’s got more room to run.

Silver futures have gained 46.47% this year through Friday, only a hair’s breadth away from 2020’s gain of 47.7%, the most recent biggest annual gain. Geopolitical instability and silver’s role as the best electrical conductor in the booming semiconductor industry have fueled this year’s rally—one so powerful that it’s providing almost the same momentum for silver as the unprecedented uncertainty of the Covid-19 pandemic.

“In fact, in my personal account, I just bought a whack-load of gold and silver bars that are heading right to the safety deposit box,” wrote David Rosenberg, of Rosenberg Research. He’s among the most pessimistic strategists on Wall Street, regularly expressing negative views about the economy and the stock market.

Economists don’t expect a recession this year. But the reshuffling of the global trade order and the potential threat to the Federal Reserve’s independence combined with the weakening of the U.S. dollar , which is the global reserve currency, has made investors pessimistic about the future. They have turned up their demand for gold and silver, two precious metals that tend to hold their value during times of crisis unlike other financial assets.

Gold is up 38.8% this year and is on pace for its best year since 1979. Its rally could offer good news for silver investors.

Consider the gold to silver ratio, a key gauge that shows how many ounces of silver it takes to buy one ounce of gold. The higher the value, the cheaper silver is relative to gold.

Currently the value is at 86. For comparison, its average over the past 50 and 20 years was 63 and 70, respectively, according to Dow Jones Market Data.

Meanwhile, the Fed is widely expected to cut interest rates this week after last cutting rates in December. Since the central bank started easing rates in September, the gold to silver ratio has been 90, on average.

This value is also higher than the average of 87 seen during the easing period from August 2019 to March 2020, and it’s higher than the average of 59 seen during the September 2007 to December 2008 easing period. When the Fed cut rates from January 2001 to June 2003, this average was 67. Comparisons with the past suggest silver is undervalued relative to gold now.

“We have reduced our gold and gold miner exposure, but we remain long” silver, the Bear Traps Report said on Friday. It referred to prices of gold relative to silver.

It’s also worth noting that as gold moves higher, silver could become more attractive as more retail investors get involved in precious metals, Chris Mancini, co-portfolio manager of Gabelli Gold Fund pointed out on Friday.

Gold isn’t the only metal shining right now.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com