Silver's 'Green' Dream Run Threatened by High Prices

The silver market has seen its 'green' dream run threatened by high prices. In August, silver outperformed gold, delivering a 15% return compared to gold's 13%. However, in September, the situation reversed, with silver experiencing a bigger drawdown than gold.

According to the Alpha Strategist report by Motilal Oswal, industrial fabrication demand for silver is projected to decline by nearly 2% to roughly 20,200 tonnes in 2026. This reduction in demand is due to manufacturers finding ways around high silver prices, such as 'thrifting' and 'recycling', which is happening in the solar energy industry.

Central banks, on the other hand, continue to hoard gold despite its record-high prices. Gold's primary value lies in monetary security, sovereign reserve backing, and its appeal as a hedge against volatility and a safe-haven asset. Global gold-backed exchange-traded funds (ETFs) recorded roughly $18 billion in net inflows during August alone.