Silver Selling At Record High—But Here's Why Analysts Say Gold Is Safer

Silver prices have surged over 78% this year, reaching a new record of $52.25 per ounce and outpacing gold, driven by the government shutdown, anticipated Federal Reserve interest rate cuts, and an unprecedented liquidity squeeze in London. While Bank of America raised its 2026 price forecast for silver to $65, analysts like Goldman Sachs warn of higher volatility and downside risk for silver compared to gold, which is favored by central banks due to its higher per-ounce value and scarcity. The current liquidity shortage is expected to be short-lived as higher prices incentivize metal flow, potentially leading to near-term volatility.

Analysis

Silver prices have experienced an exceptional surge of over 78% this year, reaching a new record of $52.25 per ounce for spot silver, significantly outperforming gold's nearly 56% gain. This rally is primarily driven by the ongoing government shutdown, heightened expectations for Federal Reserve interest rate cuts, and a weaker U.S. dollar, contributing to a broader safe-haven demand for precious metals.

A critical factor in silver's recent ascent is an unprecedented liquidity squeeze in London, where inventory has sharply declined, leading to "no liquidity available currently" according to Greenland Investment Management. While this shortage has fueled the price surge, Goldman Sachs anticipates it will be short-lived, with higher prices incentivizing metal flow back and gradually restoring liquidity.

Despite Bank of America raising its 2026 silver forecast to $65 per ounce, Goldman Sachs warns of "more volatility and downside price risk" for silver compared to gold. Gold is favored by central banks due to its higher per-ounce value and scarcity, suggesting a more stable long-term outlook for the yellow metal.

Platinum has also demonstrated robust performance, surging 82.5% this year, its largest rally since 2011. This is attributed to increased demand from electric vehicles and projected growth in hydrogen fuel cell applications, coupled with a declining global supply, highlighting diversified strength within the precious metals complex.

Key Decisions for Investors

• Investors should monitor silver's liquidity dynamics closely, as the current squeeze is expected to normalize, potentially introducing near-term volatility despite strong price appreciation
• Consider gold as a more stable safe-haven asset given its central bank demand and lower projected volatility compared to silver
• Evaluate platinum for its industrial demand drivers, particularly in EV and hydrogen fuel cell sectors, as a diversified precious metals play