Silver’s unique characteristics set it apart from gold, making its price movements less predictable and potentially more explosive, according to Kenny Zhu, Director of Research and Investment Strategy at Sprott. In an interview with Kitco News, Zhu highlighted three key factors that distinguish silver from gold: industrial demand, mining dynamics, and free float.
First, Zhu noted that 50% to 60% of silver demand comes from industrial applications, such as solar panels and electrical components. This industrial demand operates independently of monetary drivers, unlike gold, which is primarily influenced by investment trends. As a result, silver’s price action does not directly impact supply in the same way gold does.
The second factor is silver’s mining process. Most silver is produced as a byproduct of other metal mines, such as gold or copper. Since miners prioritize the primary metal, a surge in silver prices does not necessarily lead to increased production. Zhu emphasized that even if silver prices skyrocket, miners will not significantly alter their production based on silver demand alone.
The third factor is the limited free float of silver, meaning the amount physically available for purchase. When investor interest spikes, the constrained supply can amplify price movements, potentially leading to parabolic rallies. Zhu pointed to the period leading up to January 2026 as an example of this dynamic, noting that similar squeezes could reoccur.