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Silver Market Chaos: How Long Will It Continue?
May 2025 – The Silver market has experienced significant volatility over the past month, with prices swinging from nearly $35 to $27 before rebounding toward $34. In this detailed discussion, CPM Group’s Jeffrey Christian and Monex analyze the key drivers behind recent price volatility and break down CPM’s price projections for silver through Q4.
CPM Group, which authors our “Silver Lining in Radical Times” report, provides a data-driven forecast that considers seasonality, macroeconomic pressures, fabrication demand, and investor sentiment. We also address widespread rumors of a sharp price spike in May.
Current Market Conditions and Price Volatility
Silver prices have exhibited remarkable volatility over the past month, experiencing significant swings from near $35 down to around $27 and bouncing back toward $34. Such rapid movements have left investors questioning the market’s direction and stability. CPM Group’s analysis suggests that silver prices might experience additional downward pressure in the near term, though less dramatically than previous fluctuations.
Seasonal Weakness and Economic Slowdown
Historically, the second and third quarters—particularly from May through September—see seasonally weaker silver prices. This year, CPM Group anticipates that trend continuing but for distinct reasons. The current economic climate features moderate inflation, around 2.6% to 2.8%, down from higher previous rates but still above central bank targets. Economic indicators, such as GDP flash reports, hint at impending economic weakness despite resilient labor market conditions.
Supply Dynamics and Regional Demand
Significant inventories of silver have accumulated in North America, driven by strong regional demand. Silver dealers have strategically kept metal supplies in the U.S., anticipating robust local demand rather than shipping them back to Europe or Asia. This ample supply, combined with expected economic weakness and reduced fabrication demand—partially due to lower cargo volumes from China—contributes to potential downward pressure on silver prices.
Investment Opportunities Amid Price Declines
Despite the anticipated softness in silver prices over the next three to six months, CPM Group sees this as an attractive investment opportunity. Lower prices will likely encourage investors to accumulate silver, setting the stage for a price recovery toward the latter part of the year. Investors have historically used periods of price weakness strategically, indicating potential renewed strength in silver prices once economic conditions stabilize.
Debunking Market Rumors
Recently, market rumors have circulated predicting dramatic price spikes in May, suggesting levels reaching as high as $38 per ounce. CPM Group’s detailed market analysis, however, finds little support for such claims. While significant trading activity and contract deliveries occurred in April, current market conditions, inventory levels, and trading patterns in May and July futures contracts do not substantiate forecasts of a large-scale price surge.
Silver in Electric Vehicles: Realistic Expectations
Speculation about substantial silver demand stemming from electric vehicle (EV) batteries has gained attention. Discussions surrounding Samsung’s silver battery developments have amplified this speculation, suggesting potential demand for millions of ounces. However, Samsung’s actual focus remains on smaller applications like button batteries for handheld devices, smart rings, watches, and smartphones, rather than extensive EV battery use. Thus, large-scale silver consumption in EV batteries remains unlikely in the immediate future.
