Price of Silver: How Record Backwardation Could Ignite a Triple-Digit Rally
The comments below are an edited and abridged synopsis of an article by Abolade Akinfenwa, Investing.com
The price of silver is catching attention—and for good reason. In a recent Investing.com article, analysts highlight that silver’s futures curve has flipped into rare and deep backwardation, a condition where the front-month contract trades significantly above later contracts. This isn’t just a quirk of the market; it’s a strong signal that the price of silver could be heading toward triple-digit territory.
Why this matters
For decades, silver futures have operated in contango—where later delivery contracts cost more than near-term ones—because storage, insurance and financing costs make holding metal costly. But when the market flips into backwardation, it means buyers are willing to pay more for immediate delivery. It sends a clear message: The price of silver is being driven by urgent demand and shrinking immediate supply.
What’s behind the bullish outlook
Several forces are aligning to support the price of silver:
- Strained supply: Mine production is flat, recycling isn’t keeping up and industrial demand—especially from EVs, solar, and electronics—is surging.
- Investor accumulation: Silver-backed ETPs and other holders are removing metal from circulation, tightening physical supply even further.
- Scarcity visible: With lease rates and premiums spiking, the price of silver is reflecting real stress in deliverable metal.
The implications for investors
This conjunction of factors means the price of silver isn’t just riding a trend—it’s potentially entering a new regime. Analysts argue that if backwardation sticks around for months or years, the price of silver could undergo a major re-rating. Some projections point toward levels beyond US$100 per ounce and perhaps even near US$400 over time.
What this means for Canadian investors
For Canadian investors watching global commodities, the price of silver now looks less like a speculative bet and more like a strategic shift. While gold often dominates headlines, silver may offer greater upside when structural supply-demand dynamics rapidly change. Given its role in technology and clean energy, silver also brings unique exposure beyond monetary hedging.
A NOTE FROM BMG
The Opportunity for Silver
For long-term investors, this environment presents a unique opportunity. Silver has always been the more volatile counterpart to gold, but also the one with greater upside potential. As the price of silver reacts to supply bottlenecks, industrial innovation, and de-dollarization trends, it could outperform many traditional assets.
Unlike speculative tech or crypto assets, silver is tangible, essential, and undervalued relative to its historical ratio to gold. If backwardation persists and demand from green industries keeps rising, the price of silver could not only retest historic highs but also establish a new baseline for years to come.
Canadian investors in particular have an opening to diversify portfolios with physical or allocated holdings that maintain direct ownership. Given the country’s strong mining base, the price of silver offers both a hedge against inflation and an investment in global energy transformation.
Balancing optimism and caution
Despite this opportunity, investors should remain disciplined. The price of silver can experience sharp swings due to market sentiment, central bank policy, and liquidity factors. Timing is secondary to positioning; owning silver before the next structural re-rating occurs could prove more strategic than chasing it once it begins.
Bottom line
The price of silver today reflects more than a commodity; it reflects confidence, scarcity, and a global shift toward tangible assets. If current trends hold, silver may be entering a historic breakout phase that rewards patience and conviction.
