As copper prices surged 11% to record highs following Donald Trump’s shock 50% tariff on imported copper, market attention is now turning to silver – an industrial and precious metal that could be the next to rally.
COMEX copper futures skyrocketed to an all-time intraday high of $5.896 per pound on Tuesday, driven by panic buying after Trump’s tariff announcement. Bart Melek, Head of Commodity Strategy at TD Securities, noted that U.S. copper now carries a $2,000-per-tonne premium over London Metal Exchange (LME) prices, incentivizing global stockpiles to flow into American warehouses and tightening supply further.
The copper rally stems from two key factors:
Tariff-induced supply fears – The U.S. relies on imports for about 36% of its annual copper consumption (700,000 metric tons).
AI and infrastructure demand – Data center expansion and energy grid upgrades are accelerating copper consumption.
Michele Schneider, Chief Market Strategist at MarketGauge, warns that silver faces similar supply constraints: “The structural deficit we see in copper also applies to silver.”
Spot silver last traded at $36.55/oz, recovering from an intraday low of $36.30. Historically, silver often follows copper’s lead due to:
Byproduct production – 30% of global silver supply comes as a byproduct of copper mining. Higher copper costs could constrain silver output.
Industrial demand surge – Solar panels (20% of industrial use) and 5G infrastructure are driving consumption.
Undervaluation – The gold/silver ratio at 90:1 suggests potential for a catch-up rally.
While Melek remains cautious, calling copper’s move a “liquidity event,” Schneider highlights silver’s tightening fundamentals. Inventories have plunged 37% over five years, while annual industrial demand growth averages 5.8%. The Silver Institute projects a 5,000-tonne global deficit in 2024.
Analysts warn that sustained tariffs may hurt U.S. manufacturers – copper price spikes have already raised cable production costs by 15%. However, long-term trends favor silver. Solar and EV adoption will require more silver. Meanwhile, potential Fed rate cuts could reignite investment demand.
As Phillip Streible of Blue Line Futures puts it: “When markets recognize silver’s scarcity, the move could be explosive.”
