Silver’s Next Rally and Why Miners Could Outperform

AI desk brief

Sprott’s Kenny Zhu says silver’s recent pullback was driven mainly by monetary factors — rising real rates and stubborn inflation expectations — but the metal’s latest bounce showed its safe-haven/risk-hedge behavior when rates eased and AI credit stress hit sentiment. He argues the backdrop remains constructive: AI and electronics demand, China’s manufacturing/export strength, and sticky ETF inflows support a market already in a sixth/seventh consecutive annual supply deficit.

Zhu also highlights a persistent Shanghai silver premium, restocked inventories after last year’s squeeze, and China’s Q3 GDP at 4.5% with September industrial production up 5.5% y/y as evidence of ongoing physical demand. On the equity side, Sprott favors silver miners — especially primary producers — saying silver at roughly $55-$58/oz leaves room for operating leverage, margin expansion and valuation upside, while constrained supply from byproduct production limits responsiveness.