What's up with... tariffs and silver prices?
We talk about another precious metal which has also become an important industrial input and the impact on its prices due to tariff shock the world is witnessing
We're starting a segment where we'll explain how things move and what affects them. We'll bring this up whenever it's useful, so it won't be a regular series. If you like this segment, let us know what you would like to know more about and we’ll do our best to explain you in the language you can understand.
When tariffs hit the world, silver received the status of a precious metal and was explicitly exempted from duties just like gold bullion and we saw the prices of silver take the same direction as the prices of gold - downward.
The reasons attributed to fall in price of silver loosely mimicked the reasons for fall in prices of gold - profit taking, need of liquidity, covering margins. (To know why gold prices fell, see the link at the end of this article)
source: tradingeconomics.com
See how the prices of silver nosedived after the tariffs announcement on April 2, 2025.
However, as compared to gold - which fell in the range of 5%, silver went down by almost 16%. Why would a precious metal that mimics gold fall as much as 3 times more?
Here’s the reason -
Silver is known to have a dual characteristic.
It is a precious metal like gold - that acts as a store of value - and at the same time is now a vital industrial commodity - having critical applications in industries like electronics, solar, medical and so on.
But it still begs the question - if silver was treated just like gold and was explicitly exempted from tariffs, why should it fall so much?
This is because as per the latest report, industrial demand of silver accounts for over 50% of total. Silver by itself may not attract tariffs, but the articles and goods where silver acts as a critical raw material do.
When the prices of goods that has silver increase, their demand will go down. This will put pressure on the manufacturers to cut down on production leading to lesser demand of silver for industrial purposes. This means that the market’s current emphasis on the industrial demand of silver outweighs its traditional form as a safe haven.
Where do we go from here?
Analysts are still bullish that in the longer run, the prices of silver will increase and also may go higher due to two main reasons -
Silver may have become an industrial raw material but still maintains its characteristic as a precious metal having store of value. Rising global uncertainties will only contribute to more demand for precious metals and increase the value of silver.
Silver as an industrial constituent is used mostly in electronics, medical, green energy and so on. The use cases of the final products is critical and not susceptible to much drop in demand. For example - medical devices that have silver cannot be avoided. In addition to this, the world is actively adopting green technology like solar panels and EVs which needs silver. The demand for these items will eventually rise leading to rise in price of silver.
