Silver—‘Gold on Overdrive’—Is the Trending Investment Everyone Is Pursuing Now

Main Insights

• According to Vanda, investor enthusiasm for silver has now surpassed the excitement around artificial intelligence stocks.
• Commodities experts at Citi have raised their silver price forecast, describing the metal as "gold on steroids."

Silver is no longer seen as a consolation prize in today's markets.

Growing concerns over global geopolitical instability and potential risks in the U.S.—such as the threat of another government shutdown—have prompted investors to flock to tangible assets, driving their values to unprecedented levels. While gold recently broke through the $5,000 per ounce mark, silver has outpaced gold with an even more dramatic surge in price.

So far this year, spot silver prices have soared nearly 50%, far exceeding gold's gain of over 15%. Although silver has retreated from its record intraday high of about $117 as of Tuesday, many analysts anticipate continued strong performance in the short term. Unlike gold, which has benefited from central bank buying and institutional hedging, silver's recent rally is largely fueled by individual investors making it the market's standout trade.

Why Silver's Surge Matters for Investors

While central bank activity has helped push gold to new heights, silver's momentum is being driven by different factors—chief among them, a surge in retail investor interest, according to analysts.

Silver has recently been dubbed "gold on steroids" and "the new favorite among retail traders." Vanda Research, which monitors retail investment trends, reports that silver has overtaken popular artificial intelligence stocks like Nvidia (NVDA) in terms of trading momentum. On the previous day alone, retail investors poured approximately $171 million into the iShares Silver Trust (SLV), marking the largest single-day net retail inflow ever recorded for the ETF.

However, not all investors are bullish. Some are betting against silver, with trading activity split between those chasing the rally and short-sellers who are wagering on a decline using funds like the ProShares UltraShort Silver ETF (ZSL), which aims to amplify returns when silver prices fall, according to Vanda's data.

Investors from emerging markets also appear to be fueling silver's rise, with prices in Shanghai recently outpacing those in London, according to a note from Citi's commodities research team. The analysts also noted that China's only silver ETF will halt new subscriptions starting tomorrow in an effort to curb excessive retail speculation.

Despite these measures, Layton and his colleagues believe demand will remain strong. They predict that silver—referred to as "gold on steroids"—will keep climbing until its price appears "historically expensive" compared to gold.

Potential Price Scenarios and Risks

If gold trades between $5,100 and $5,400 per ounce and the gold-silver ratio—which measures the relative value of the two metals—returns to its 2011 low of 32, silver could reach as high as $170 per ounce. Should the ratio fall to the 1979 low of 14, silver might climb to $300, though Citi considers this outcome highly improbable. The bank has now raised its short-term price target for silver to $150, up from $100, marking the second increase this month after the metal surpassed their previous projections.

One potential risk to monitor: Citi warns that "Chinese investors may take profits ahead of the Chinese New Year," which is just two weeks away.