Silver's 2024 Rally: Understanding the Record Run and What Drives Price Movement

Silver has made headlines recently, climbing to levels not seen in over a decade. On October 21, 2024, the white metal touched US$34.20 per ounce during intraday trading—a remarkable 48 percent gain since the start of the year. This surge has brought renewed focus to the spot price on silver and the fundamental drivers behind precious metal valuations.

The Long Road to Current Highs

Before examining today’s market dynamics, it’s worth understanding silver’s price history. The all-time high of US$49.95 per ounce occurred on January 17, 1980, though this record came under questionable circumstances. Two wealthy traders known as the Hunt brothers attempted to manipulate the market by accumulating massive quantities of both physical silver and futures contracts. Their strategy backfired spectacularly on March 27, 1980—a date now called Silver Thursday—when they failed to meet margin requirements and prices collapsed to US$10.80.

This dramatic event remained unsurpassed for three decades. In April 2011, silver finally challenged that level again, reaching US$47.94 amid strong investment demand. That price marked more than triple the 2009 average of US$14.67. Following the 2011 peak, prices consolidated into a US$15-20 range throughout most of the 2010s before trending upward from mid-2020 onward, accelerated by COVID-19 uncertainty and safe-haven flows.

What’s Driving 2024’s Upward Momentum

The current rally reflects multiple converging factors. The spot price on silver has responded to U.S. election uncertainty, escalating tensions in the Middle East, and investor expectations of continued monetary easing. These concerns have renewed appetite for safe-haven assets, similar to gold’s recent breakout to record levels.

Beyond geopolitical drivers, industrial demand offers structural support. Silver is essential for solar panel manufacturing, and the global energy transition is creating substantial demand growth. The Silver Institute projects a 20 percent surge in solar-related silver consumption for 2024, translating to roughly 2 percent overall demand growth despite an anticipated 13 percent contraction in physical bar and coin purchases.

Supply Challenges and Market Structure

Global silver mine production faces headwinds that could support prices. The three largest producers—Mexico, China, and Peru—are expected to see output declines in 2024. Mexico faced production disruptions when Newmont’s Peñasquito mine suspended operations for four months due to labor action. Argentina, Australia, and Russia also experienced production constraints from lower ore grades and mine closures.

The Silver Institute’s World Silver Survey forecasts global production will decline 0.8 percent to 823.5 million ounces in 2024. While new projects in the U.S. and Morocco may add supply, these gains won’t offset losses elsewhere. More notably, market analysts expect a substantial 215.3 million-ounce deficit in 2024—the second-largest shortfall in over two decades—creating structural support for valuations.

Trading Silver: Spot Markets and Investment Routes

Understanding how silver trades helps investors grasp price movements. The spot price on silver is denominated in dollars per ounce and reflects real-time trading across global markets—from London’s physical markets to New York’s COMEX futures division. London remains the center for physical trading, while the NYMEX handles most paper contracts.

Investors can gain silver exposure through three primary channels. Physical bullion (bars, coins, rounds) trades on the spot market with immediate delivery. Futures contracts offer leverage and flexibility without requiring storage. Exchange-traded funds (ETFs) provide stock-like convenience, with options ranging from physical bullion-backed funds to futures-based or silver mining stocks.

The Manipulation Question

A critical consideration for silver investors involves price integrity. The precious metals sector has experienced well-documented manipulation. In 2015, a U.S. probe charged 10 banks with rigging silver rates, with evidence showing UBS, HSBC, Bank of Nova Scotia, and others manipulated prices from 2007 to 2013. JPMorgan Chase paid US$920 million in 2020 to settle manipulation allegations spanning multiple commodities.

In response, the London Silver Market Fixing was replaced by the LBMA Silver Price in 2014, administered by ICE Benchmark Administration to improve transparency. Market observers believe manipulation risks have diminished significantly, though vigilance remains warranted.

Looking Ahead: Volatility and Opportunity

Silver’s current strength reflects both safe-haven demand and structural supply-demand imbalances. The metal’s dual nature—valued by investors as wealth insurance and by manufacturers for industrial applications—creates inherent volatility. Solar expansion, battery technology, automotive use, and medical applications ensure diverse demand drivers.

The critical question facing investors is whether silver can sustain momentum above the US$30 level. With geopolitical uncertainty persisting, monetary conditions remaining accommodative, and supply constraints evident, near-term fundamentals appear supportive. However, silver’s history demonstrates that sharp reversals are possible. Investors monitoring the spot price on silver should recognize that while the 2024 rally is noteworthy, it still remains below the record territory tested in 2011. The path to US$50 territory remains uncertain, though current market dynamics suggest the white metal warrants close attention in any diversified portfolio.