A surge in the price of silver to record highs this month has prompted a warning from Elon Musk that manufacturers could suffer the consequences.
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.
Silver hit $79 (£58) an ounce for the first time last Friday, a new peak, up from $56 at the start of December, and just $29 an ounce at the start of 2025.
“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.
Tony Sycamore, a market analyst at IG, said a “generational bubble” was playing out in silver, as more capital was drawn into the precious metals market.
“The rally in precious metals has been supported by expectations of multiple Fed rate cuts in 2026, alongside robust central bank and private investor buying. 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.
Gold and silver are on track for their best years since 1979. Gold has risen by more than 70% this year to more than $4,500 an ounce, up from $2,623 at the start of 2025.
Spot platinum rose 5.3% on Friday to $2,338.20 an ounce, in its strongest weekly rise on record.
Both platinum and palladium, which are key components in automotive catalytic converters, have surged on tight supply, tariff uncertainty, and rotation from gold investment demand, with platinum up roughly 170% this year.
