If we look at the fundamentals of the metals market itself, the picture becomes even more interesting. Silver is currently supported by powerful factors that many people forget when looking at futures charts.
For the sixth year in a row, the global physical silver market has been experiencing a structural deficit. Mine production is barely growing, since most silver is produced as a by-product of copper and zinc mining. This means miners simply can’t ramp up output quickly.
At the same time, industrial demand remains high. In addition to green technologies and solar energy, large quantities of the metal are increasingly going into microelectronics and infrastructure for AI data centers. Industrial users and major players are steadily drawing down physical stocks in exchange warehouses to make up for the shortfall in newly mined supply.
And that’s where things get interesting. On one hand, the speculative futures market is overheated and clearly ripe for a short-term shakeout to flush out leveraged traders. On the other hand, the fundamental shortage of physical silver creates a solid floor below which the metal simply won’t be allowed to fall for long.
$XAG
For the sixth year in a row, the global physical silver market has been experiencing a structural deficit. Mine production is barely growing, since most silver is produced as a by-product of copper and zinc mining. This means miners simply can’t ramp up output quickly.
At the same time, industrial demand remains high. In addition to green technologies and solar energy, large quantities of the metal are increasingly going into microelectronics and infrastructure for AI data centers. Industrial users and major players are steadily drawing down physical stocks in exchange warehouses to make up for the shortfall in newly mined supply.
And that’s where things get interesting. On one hand, the speculative futures market is overheated and clearly ripe for a short-term shakeout to flush out leveraged traders. On the other hand, the fundamental shortage of physical silver creates a solid floor below which the metal simply won’t be allowed to fall for long.
$XAG