Insights 
VT 
Silver prices fell on Friday, trading at $48.17 per troy ounce, a decrease of 1.48% from the previous day. Since the beginning of the year, silver prices have increased by 66.72%.
The Gold/Silver ratio rose slightly, reaching 84.50 from 84.39. This ratio indicates the number of silver ounces needed to match the value of one gold ounce.
Silver as a Store of Value
Silver is valued for its role as a store of value and a potential hedge during high-inflation periods. It is traded both physically and through financial instruments like Exchange Traded Funds.
Various factors influence silver prices, including geopolitical tensions and interest rates. The US Dollar’s strength also impacts silver due to pricing in dollars. Additional factors such as investment demand, mining supply, and recycling rates can also affect silver’s price.
Industrial demand significantly affects the price, given silver’s use in electronics and solar energy. Economic dynamics in the US, China, and India can lead to price fluctuations.
Silver prices often move in tandem with gold, given their similar status as safe-haven assets. The Gold/Silver ratio aids in evaluating the relative value between the two metals, suggesting potential undervaluation or overvaluation in the market.
Traders Position for Significant Price Moves
Given the 66.72% rally in silver so far in 2025, we see this week’s 1.48% dip as a potential entry point or a warning sign. The run-up has been largely fueled by the Federal Reserve’s interest rate cuts earlier this year, which have weakened the US Dollar. Traders should watch to see if this pullback is simple profit-taking or the start of a larger correction.
The underlying industrial demand for silver remains incredibly strong, providing a solid price floor. Global solar panel installations are on track to exceed projections from a few years ago, now targeting over 500 gigawatts for 2025, consuming a significant portion of silver supply. This, combined with steady demand from the electronics and electric vehicle sectors, supports a long-term bullish outlook.
We are paying close attention to the Gold/Silver ratio, which now stands at 84.50. Looking back, this is well above the 21st-century average of around 68, suggesting silver may be undervalued relative to gold. If this ratio begins to fall, we would expect silver to outperform gold in the weeks ahead.
For derivative traders, this environment suggests high implied volatility. Buying call options on this dip could be a capital-efficient way to bet on the resumption of the uptrend, driven by strong fundamentals. Conversely, the sharp year-to-date increase makes purchasing put options a prudent hedge to protect gains against a more significant downturn.
The tension between a potential short-term pullback and the robust long-term demand story creates opportunity. We see traders positioning for a significant price move, regardless of direction, by using strategies like straddles. Upcoming industrial production data from China will be a key catalyst to watch in the next few weeks.
