Key Points
- Silver prices fell on Friday after the U.S. decided not to impose new tariffs on critical minerals.
- The metal is still up more than 14% for the week. The threat of tariffs had been a major driver of the recent rally.
- The broader “debasement trade” and geopolitical uncertainty are also supporting prices.
- A shortage of refining capacity is limiting the supply of recycled silver.
Silver prices dropped on Friday after the U.S. government decided not to impose new import tariffs on critical minerals. However, the metal is still up more than 14% for the week, capping off a wild ride that has seen it triple in value over the past year.
The threat of tariffs on minerals like silver and platinum had been a major driver of the recent rally. Traders had been hoarding the metal in the U.S. in anticipation of the new taxes, which created a supply squeeze in other parts of the world.
While President Trump stopped short of imposing the duties for now, he didn’t rule out doing so in the future. This lingering uncertainty is likely to keep the market on edge.
Despite the small pullback on Friday, the bigger picture for silver is still very bullish. The metal has hit a series of record highs this year, with investors flocking to it as a safe haven. A broader “debasement trade” is also at play, in which people are avoiding currencies and government bonds amid fears of massive government debt.
President Trump’s aggressive foreign policy and attacks on the Federal Reserve have also boosted the appeal of precious metals. The recent threat of a criminal indictment against Fed Chair Jerome Powell has raised serious questions about the central bank’s independence, which is seen as another reason to own hard assets like gold and silver.
While high silver prices are encouraging more recycling, a shortage of refining capacity is making it hard for that extra supply to return to the market quickly.
On Friday, silver fell 1.1% to $91.38 an ounce. Gold also dipped slightly, but was still up about 2% for the week.
