The price of Silver continued its upward trajectory this week, reaching a record high of $93.75 per troy ounce on Thursday morning. As a result, the Gold/Silver ratio briefly slipped below the 50 mark for the first time since March 2012. Since the beginning of the year, Silver has risen in price by around 30%. By comparison, the price of Gold rose by 'only' 7% over the same period. Last year, Silver had already significantly outperformed Gold with a price increase of almost 150%, Commerzbank's commodity analyst Carsten Fritsch notes.

Trump talks ease tariff fears, Silver pulls back 7%

"Now, US President Trump announced that he intends to negotiate bilateral agreements to secure the supply of critical minerals. This has temporarily alleviated fears of tariffs. As a result, the price of Silver has fallen by more than 7% from the record high mentioned above. With a lower tariff risk, more Silver from COMEX inventories could flow to China, where Silver is currently very tight. Despite the risk of US tariffs being introduced, 97.5 million ounces or more than 3,000 tons of Silver have flowed out of COMEX stocks since the beginning of October."

"A considerable portion of this is likely to have gone to London, where acute shortages occurred in autumn. However, China is also likely to have been a recipient of these deliveries, where exchange-registered inventories had fallen to their lowest level in around 10 years. The declining COMEX inventories can therefore be seen as an indicator of a tight Silver market and thus also a reason for the sharp price increase since October. The Silver price therefore remains well supported even without the tariff risk."

"The introduction of a new Silver futures contract, announced by the CME as the owner of COMEX for February 9, could provide further tailwind. This contract will have a lot size of 100 ounces and is therefore likely to appeal primarily to retail investors. The Silver futures traded on COMEX have a lot size of 5,000 ounces, which makes them less suitable as an investment instrument for retail investors."