Silver is trading at $50.70, close to its all-time high, boosted by safe-haven demand and supply constraints. The lack of accessible Silver in London and expectations of US tariffs have increased prices, with Silver ETFs seeing inflows over three sessions, totalling 822.6 million ounces.

The rally is supported by anticipated US Federal Reserve monetary easing. Minutes from the September FOMC meeting show support for two more rate cuts, amid a weakening labour market and fiscal standoff in Washington. The ongoing US government shutdown and halted key data releases fuel concerns of slower growth and reinforce expectations of further Fed policy support.

A weaker US Dollar, with the DXY below 99.50, makes Silver more appealing to foreign traders. The Silver Institute projects a supply deficit in 2025, stressing the metal’s strong fundamentals. The Fed’s dovish stance and US fiscal uncertainties suggest Silver’s bullish momentum may continue if conditions remain unresolved.

Silver, used as a store of value and for diversification, can be bought physically or through ETFs. Its prices are influenced by geopolitical instability, interest rates, US Dollar behaviour, and various industrial demands, particularly in electronics and solar energy. Silver tends to follow Gold’s movements, influenced by the Gold/Silver ratio.

Given silver’s position near its all-time high of $51.24, we see a clear bullish case for the coming weeks. The combination of a US government shutdown and expectations for more Federal Reserve rate cuts creates a powerful tailwind. Traders should consider buying call options to capitalize on potential further upside, as these factors are unlikely to resolve quickly.

The physical market tightness, especially in London, adds another layer of support to the current rally. We have seen total known ETF holdings climb to 822.6 million ounces, a significant increase from the roughly 715 million ounces held back in the summer of 2024, confirming strong and sustained investor demand. This supply squeeze suggests that any price dips will be shallow and brief, making selling out-of-the-money put options an attractive strategy to collect premium.

The Fed’s dovish stance, signaled in the September FOMC minutes, is weakening the US dollar and directly boosting silver. This is a major shift from the high-rate environment we navigated through much of 2023 and 2024. With the US Dollar Index now below 99.50, the path of least resistance for silver appears to be higher.

Beyond the immediate financial news, we must remember the underlying structural deficit in the silver market. The demand from industrial sectors, particularly for solar panels and electric vehicles, has continued its strong growth trajectory seen throughout 2024. This provides a solid price floor, suggesting that the current rally is supported by robust real-world consumption, not just speculation.

The Gold/Silver ratio also tells a compelling story of silver’s outperformance. After trading at elevated levels near 88:1 in late 2024, the ratio has compressed significantly as silver’s price has surged. This indicates that silver has its own powerful momentum, and traders could explore pairs trades, going long silver against gold, to bet on this trend continuing.