Silver Soars to Record High Amid Geopolitical Tensions
Summary
Silver prices reached an all-time high of $94 an ounce due to geopolitical unrest, specifically mentioning a potential acquisition of Greenland by the U.S. and threats from the EU regarding trade deals. The white metal opened at $93.3 an ounce and closed at $93.5 on Monday. The demand for silver has doubled since April 2025, driven by its use in strategically important industries like semi-conductors. Gold prices also saw a rally, hitting an all-time high of ₹4,690 an ounce. On the MCX, gold and silver topped ₹1,45,000/10 grams and ₹3,04,000/kg respectively.
Full Analysis
Silver prices reached an all-time high of $94 an ounce due to geopolitical unrest, specifically mentioning a potential acquisition of Greenland by the U.S. and threats from the EU regarding trade deals. The white metal opened at $93.3 an ounce and closed at $93.5 on Monday. The demand for silver has doubled since April 2025, driven by its use in strategically important industries like semi-conductors. Gold prices also saw a rally, hitting an all-time high of ₹4,690 an ounce. On the MCX, gold and silver topped ₹1,45,000/10 grams and ₹3,04,000/kg respectively.
Background Context
Silver has been used as currency and a store of value for millennia, predating even gold in some regions. Its use in coinage dates back to ancient Greece and Rome. The silver standard, where currency was directly linked to silver, was prevalent in many countries, including the United States, during the 19th century. The demonetization of silver, particularly in the late 19th century, led to significant economic shifts and debates, including the 'free silver' movement in the US. Silver's industrial applications have grown significantly since the 20th century, moving beyond jewelry and silverware to include photography, electronics, and medicine.
Current Developments
The silver market has experienced increased volatility in recent years, influenced by factors such as rising demand in green technologies (solar panels, electric vehicles), supply chain disruptions, and investor sentiment. The silver-to-gold ratio, a key indicator, has fluctuated widely, reflecting changing perceptions of relative value. Central bank policies and inflation expectations also play a significant role. Future outlook suggests continued demand growth, driven by industrial applications and potential as a hedge against inflation, but supply constraints and geopolitical uncertainties could lead to price fluctuations.
Key Facts
- Silver all-time high: $94/ounce
- Gold all-time high: ₹4,690/ounce
- Silver price doubled since: April 2025
Practice MCQs
Question 1
Consider the following statements regarding factors influencing silver prices:
1. Increased demand from the semiconductor industry can drive up silver prices.
2. Geopolitical instability generally leads to a decrease in the demand for silver as a safe haven asset.
3. Potential acquisition of Greenland by the U.S. could impact silver prices due to its mineral resources.
Which of the statements given above is/are correct?
- 1 and 2 only
- 1 and 3 only
- 2 and 3 only
- 1, 2 and 3
Explanation: Statement 1 is correct as increased demand from the semiconductor industry, which uses silver in its products, can drive up prices. Statement 3 is correct as potential acquisition of Greenland could impact silver prices due to its mineral resources. Statement 2 is incorrect as geopolitical instability generally increases the demand for silver as a safe haven asset.
Question 2
Which of the following statements accurately describes the historical role of silver in monetary systems?
- Silver has never been used as a standard for currency valuation.
- The silver standard was widely adopted globally and remains prevalent today.
- The demonetization of silver in the late 19th century led to economic debates and shifts.
- Silver's primary use in monetary systems was limited to decorative coins.
Explanation: Option C is correct. The demonetization of silver in the late 19th century led to economic debates and shifts, including the 'free silver' movement in the US. Option A is incorrect as silver was used as a standard for currency valuation. Option B is incorrect as the silver standard is not prevalent today. Option D is incorrect as silver had a significant role beyond decorative coins.
Question 3
Assertion (A): Increased geopolitical tensions often lead to a rise in the price of precious metals like silver and gold.
Reason (R): Precious metals are considered safe-haven assets during times of uncertainty and economic instability.
In the context of the above statements, which of the following is correct?
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is NOT the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true.
Explanation: Both the assertion and the reason are correct, and the reason correctly explains why geopolitical tensions lead to a rise in the price of precious metals. Investors seek safe-haven assets during times of uncertainty, driving up demand and prices.
Mains Practice Questions
Question 1
Analyze the factors contributing to the recent surge in silver prices, and discuss the potential implications of this trend for the global economy. (250 words)
Previous Year Questions
PYQ 1 - UPSC Prelims 2024 2024
Which of the following factors could contribute to a surge in silver prices, as observed in the given news?
- (a) Decreased demand from the semi-conductor industry
- (b) Geopolitical instability and uncertainty
- (c) Increased gold production leading to lower silver demand
- (d) Strengthening of the US dollar
Explanation: Geopolitical instability, such as potential acquisitions and trade tensions, increases uncertainty and drives investors towards safe-haven assets like silver.
PYQ 2 - UPSC Mains 2024 2024
Discuss the factors that influence the price of precious metals like gold and silver. How do geopolitical events and industrial demand interact to affect their market value?
PYQ 3 - SSC CGL 2024 2024
What was the all-time high price of silver per ounce, as mentioned in the news?
- (a) $93.3
- (b) $93.5
- (c) $94
- (d) $95
Explanation: The news explicitly states that silver reached an all-time high of $94 an ounce.
PYQ 4 - SSC CHSL 2024 2024
Since which month and year has the demand for silver doubled, according to the news?
- (a) April 2024
- (b) January 2025
- (c) April 2025
- (d) July 2025
Explanation: The news mentions that the demand for silver has doubled since April 2025.
PYQ 5 - IBPS PO 2024 2024
Which of the following is NOT mentioned as a factor contributing to the rise in silver prices?
- (a) Geopolitical unrest
- (b) Increased demand from the semi-conductor industry
- (c) Decreased interest rates
- (d) Potential acquisition of Greenland
Explanation: While decreased interest rates can indirectly influence precious metal prices, the news focuses on geopolitical unrest and industrial demand as direct drivers.
PYQ 6 - SBI PO 2024 2024
What was the all-time high price of gold on the MCX (Multi Commodity Exchange), as stated in the news?
- (a) ₹4,690/ounce
- (b) ₹1,45,000/10 grams
- (c) ₹3,04,000/kg
- (d) Both (b) and (c)
Explanation: The news mentions both ₹1,45,000/10 grams and ₹3,04,000/kg as all-time highs on the MCX.
PYQ 7 - CDS 2024 2024
Which industry's increased demand is cited as a major factor driving the surge in silver prices?
- (a) Automotive
- (b) Textile
- (c) Pharmaceutical
- (d) Semi-conductor
Explanation: The news specifically mentions the increased demand from the semi-conductor industry as a key driver of silver prices.
PYQ 8 - CDS 2024 2024
Geopolitical tensions, as mentioned in the news, can lead to which of the following economic effects?
- (a) Decreased inflation
- (b) Increased foreign investment in developing countries
- (c) Increased demand for safe-haven assets
- (d) Reduced volatility in financial markets
Explanation: Geopolitical tensions increase uncertainty, leading investors to seek safe-haven assets like gold and silver, thus increasing their demand and prices.