Silver's Outperformance Marks The Next Commodity Bull Phase

Silver extended its rally to close at $39.71 per ounce, marking a fresh multi-year high just days after the U.S. added the metal to its list of critical minerals. The designation instantly reframed how traders and policymakers view silver. It is not just an industrial input for solar panels and electronics, but also a material that now sits squarely at the center of the geopolitical chessboard.

Year-to-date, silver has surged more than 37%, recently outperforming gold. For seasoned natural resource investors like Rick Rule, the weakening of the gold-to-silver ratio signals the arrival of the next phase of the commodity bull market – characterized by higher volatility.

Citigroup's strategist Tom Mulqueen and his team argue that U.S. silver premiums are "underpricing tariff risk," currently standing at just a 2–3% premium versus ex-U.S. pricing. In last week's note, Mulqueen warned that such narrow spreads ignore the possibility of Section 232 tariffs, which could reach as high as 50% on critical imports.

If Washington moves decisively, the repricing could be sharp and disorderly. For silver specifically, Mulqueen sees the tariff review as a potential inflection point that could realign U.S. pricing relative to global benchmarks.

Monetary policy expectations are providing a second tailwind. Silver's climb coincides with growing conviction that the Federal Reserve will cut rates as early as next month. Fed Chair Jerome Powell's Jackson Hole speech reinforced that view, with futures markets pricing in a near-90% probability of a September cut.

While macro positioning matters, the cultural and geopolitical dimensions of silver are now harder to ignore. In a recent interview for Commodity Culture, analyst Eric Young outlined why he believes the era of silver suppression is coming to an end.

"The fact that the silver price is so low… actually benefited China in the last 30 years," Young argued, pointing to bullion banks keeping prices manageable to support China's manufacturing dominance.

With the U.S. now reshoring production and directly competing with China, he suggested the rationale for holding silver down no longer applies.

"If China is not going to be the primary manufacturing hub for the U.S. or the West, why suppress the price of silver to assist China to keep things cheap?" he questioned.

Young also highlighted a broader scramble for physical supply, with China buying silver concentrates directly at the mine level. But perhaps even more notable is Saudi Arabia's entry into the silver game.

The kingdom's central bank has quietly accumulated a stake in iShares Silver Trust (NYSE:SLV), the world's largest silver-backed ETF. Although it was just a $40 million investment, Riyadh is signaling that it sees silver not just as an industrial metal but as a strategic financial asset—one that could complement its diversification drive under Vision 2030.

Suppose one of the world's largest oil exporters is allocating capital into silver ETFs. In that case, it may push other sovereign wealth funds to follow suit, especially as global commodity strategies evolve beyond hydrocarbons.

The difference here is important. When central banks purchase gold, it tends to be a slow and methodical process of reserve accumulation. However, sovereign purchases of silver ETFs could inject sudden bursts of liquidity into a market that is far smaller and less liquid than the gold market, amplifying price swings.

"Instead of subsidizing China with cheap silver, the U.S. is going to be competing with China to get the silver in its jurisdiction," Young noted. That competition, now joined by the Gulf's deep-pocketed players, adds a new layer to silver's role in the global economy.

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