Elon Musk warns manufacturers could suffer consequences of surge in price of silver

"Silver has risen sharply during December, part of a precious metals rally that also pushed gold and platinum to record levels on Boxing Day. Analysts have attributed the jump in prices to expectations of US interest rate cuts by the Federal Reserve in 2026, leading to increased demand for hard assets that protect against inflation and currency debasement. New restrictions on silver exports from China, which begin on 1 January, have created supply fears while geopolitical worries have lifted demand for safe-haven assets."

"This is not good. Silver is needed in many industrial processes, Musk posted on X. Uses for the metal include in electrification, solar power panels, electric vehicles and data centres, all areas in which demand has been rising, eating into silver inventories. But as well as industrial applications, silver has a role as a monetary metal a store of value."

"However, the dominant driver of late has been a severe structural supply-demand imbalance in silver, sparking a scramble for physical metal, Sycamore said. According to Bloomberg, much of the world's readily available silver is sitting in New York awaiting the outcome of a US commerce department investigation into whether imports of critical minerals pose a national security risk. The review could pave the way for tariffs or other trade curbs on the metal, Bloomberg said."

Silver surged in December to a peak of $79 an ounce, rising from $56 at the start of December and $29 at the start of 2025. Expectations of US Federal Reserve rate cuts in 2026 have increased demand for hard assets, while new Chinese export restrictions from 1 January and geopolitical uncertainty have tightened supply. Robust central bank and private investor buying and a structural supply-demand imbalance have prompted a scramble for physical metal. Much of the readily available silver is held in New York pending a US commerce department investigation that could lead to tariffs or trade curbs. Rising industrial use in electrification, solar panels, electric vehicles and data centres is depleting inventories and raising concerns for manufacturers.

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