Why Pro Traders are Focusing on Silver Right Now

“It is a tangible asset you can touch with your hands,” says Robert Kiyosaki, the author of Rich Dad Poor Dad, when asked the reason he invests in silver. Kiyosaki claims that silver “offers the best financial protection going forward.” And he is not alone. Peter Krauth, the author of The Great Silver Bull expects the XAGUSD to hit $40 per ounce in H2 2025. Julia Khandoshko, CEO of Mind Money, is the most bullish on the shiny metal and projects a potential for its price to touch $50 per ounce.

Does all this bullish sentiment make you want to diversify your portfolio with silver trading in 2025? Learn about the factors fuelling the positive sentiment around silver. And remember not to blindly follow statements by successful traders.

Factors Influencing the Bullish Sentiment 

Historically, silver outperforms gold in the later stages of an uptrend in the precious metal markets. Silver hit a 12-year high of $34.86 in the fourth week of October 2024, representing 40% YTD growth and surpassing gold’s year-to-date gains. However, as analysts predicted, the white metal’s price underwent a pullback in the latter part of Q4 2024. Silver closed the year close to $29 per ounce. However, there could be tailwinds to the price in 2025. Here’s what may lend upside to the “cheaper” safe haven.

Industrial Demand

Did you know that silver is among the 10 most traded commodities in the world? It has had popular applications in jewellery, medicine and cutlery making for centuries. The white metal’s high reflectivity, conductivity and malleability make it indispensable to emerging modern industries as well.

Green Economy

The Silver Institute calls silver the “green metal” for a reason. Silver is a critical component for solar panels, PV cells and hydrogen-based clean energy projects. It is also crucial for electric vehicles, which require between 25 and 50 grams of silver per vehicle. With 85 million EVs expected to be on the roads by end-2025, silver demand from the automotive sector will provide tailwinds to its prices. Gartner predicts 82% of this demand to originate from China and Europe, the regions that lead the transition to clean energy.

Intelligent Machines

Artificial intelligence (AI), which is increasingly becoming a business growth imperative, may also push silver demand. This is because silver is the most important component of advanced high-speed microchips used in data centres. The AI sector, projected to contribute a whopping $15.7 trillion to the global economy by 2030, uses silver for its components. The rising demand may exert upward price pressure on the white metal.

Supply Constraints

In 2025, combined demand from the industrial, jewellery and cutlery segments is expected at 1.21 billion ounces. This is significantly higher than the expected total supply of 1.03 billion ounces. The green metal is primarily sourced from Russia and Kazakhstan. Due to geopolitical challenges, supply expansion seems far from possible. Demand-supply imbalances may induce volatility, while keeping the price up.

Trump’s Presidency

The markets took the Trump-win sorely with XAGUSD shedding almost 10% from November 5 to December 28, 2024. Donald Trump may reverse the current President’s Inflation Reduction Act (IRA). The act provisions incentives and tax deductions for solar projects. This likely has weighed on investor sentiment since the election results were announced, affecting silver price. 

However, there is a catch. Elon Musk, who leads the Department of Government Efficiency (DOGE), is also the CEO of Tesla Energy, a major supplier of solar panels in the US. With his presence, President Trump may face resistance to removing green incentives from the US. All in all, despite Trump, silver demand from the solar energy sector may remain robust in America. However, volatility may be expected till there is greater clarity.

The incoming president has chosen an Indian American venture capitalist, Sriram Krishnan, as his senior policy advisor on AI. This indicates that the new US Cabinet recognises the potential of the technology and may have a hard time decelerating its momentum. This may positively impact the country’s tariffs on China, the biggest supplier of AI chips, lending support to the Chinese AI-chip manufacturing sector and fuelling silver demand.

Trading Silver 

As of January 1, 2025, XAGUSD has been undergoing a price correction. Analysts widely expect the white metal to shine brighter and surge to fresh record highs through the year. As the volatile silver market presents diverse opportunities, gaining exposure to the metal can be tricky and may require higher capital. Derivative instruments, such as contracts for difference (CFDs), are a popular way to gain exposure to high-priced assets. Traded on leverage, CFDs lower entry barriers for traders while allowing them to speculate on the direction of price movement. However, by increasing market exposure, margin trading amplifies both potential gains and potential losses. Therefore, risk management is paramount when trading silver via CFDs.

Finally, stay updated on the latest news and market developments associated with the white metal and do your analysis before opening positions.

To Sum Up

• Investors worldwide expect XAGUSD to see significant upside potential in 2025.
• Surging AI robot and data centre demand is expected to support the silver rally.
• The push for energy transition is also likely to exert upward pressure on silver price.
• Supply deficits may further lend upside to the white metal’s price.
• Trump’s presidency may have a mixed impact on the XAGUSD.
• Trading silver via CFDs is a popular technique to expand market exposure.
• Risk management is paramount while trading on margin.

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