Silver Reaches Record High ($57.86/Oz) Driven by Fed Rate Cut Bets and Supply Tightness

This analysis is based on the Wall Street Journal report [1] published on December 1, 2025, which confirmed silver reaching a record high of $57.86 per ounce [1][2][4][5]. Two interconnected drivers underpinned this surge:

1. Monetary Policy Expectations
   : Markets priced an 88% probability of a 25-basis-point Federal Reserve (Fed) rate cut in December 2025 (CME FedWatch Tool) [3][5]. Rate cuts reduce the opportunity cost of holding non-yielding precious metals, amplifying investor demand for silver.
2. Structural Supply-Demand Tightness
   : The 2025 silver market faces a projected 95 million ounce deficit, the fifth consecutive year of shortfalls with cumulative gaps totaling ~820 million ounces since 2021 [6][7][9]. Mine production remained flat at 813 million ounces [6][7][8], while total demand reached 1.12 billion ounces—driven by robust industrial use in EVs, AI, and photovoltaics [6][7].

The rally extended a 15% six-day gain, with silver outpacing gold’s ~60% 2025 return [2][4]. Silver futures (SI) broke through four-decade resistance levels ($50/oz) from 1980 and 2011 [3]. Related assets performed strongly: First Majestic Silver (AG) closed up 8.86% at $15.23, Pan American Silver (PAAS) up 3.87% at $45.67, and Junior Silver Miners ETF (SILJ) up 3.16% at $26.09 on November 28, 2025 [0].

• Cross-Domain Synergy
  : Fed monetary policy (influencing investor flows) intersects with industrial demand from green technologies (EVs, solar) and AI, creating dual catalysts for silver’s rally. The U.S. government’s designation of silver as a critical mineral further emphasizes its long-term industrial value [7].
• Gold-Silver Ratio Compression
  : The ratio fell to ~50 (down from ~80 in early 2025), reflecting silver’s outperformance. This compression may attract additional investors seeking relative value opportunities [2][9].
• Persistent Supply Constraints
  : Flat mine production—despite elevated prices—and sustained industrial demand suggest the supply deficit could persist medium-term, providing fundamental price support [6][8].

• Sustained Rate Cuts
  : Delivery on rate cut expectations and additional reductions could push silver prices to $60–$70 per ounce in 2026 [5][9].
• Green Tech Demand Growth
  : Long-term industrial demand from EVs, solar panels, and AI hardware may continue driving silver consumption [6][7][9].

• Monetary Policy Risk
  : A surprise Fed decision to hold rates or adopt a hawkish stance could trigger sharp price declines [2][3].
• Market Correction Risk
  : Technical indicators (RSI >80) signal overbought conditions, increasing the likelihood of a 10–15% short-term pullback [5].
• Supply Response
  : New mine projects or expanded production could ease the deficit, pressuring prices downward [6][8].
• Demand Slowdown
  : A slowdown in EV or solar adoption could reduce industrial silver demand [9].

• Silver reached a record $57.86/oz on December 1, 2025, driven by Fed rate cut bets (88% probability) and a 95 million ounce 2025 supply deficit.
• Impacted instruments include silver futures (SI), spot silver (XAG), ETFs (SLV, SIL), and mining stocks (AG, PAAS, SILJ, FRES).
• Silver has doubled in value in 2025, outperforming gold (~60% gain).
• Critical uncertainties include the Fed’s December 10, 2025, policy decision, supply responses to higher prices, and near-term industrial demand trends.
• Stakeholders should monitor risks from overbought conditions, policy surprises, and supply-demand shifts.