Silver Supercycle: 'You Never Have Enough Of It,' Hedge Fund Analyst Says As $50 Level Looms

A silver “supercycle” may already be underway, as the structural market tightness and resurgent investor interest in the grey metal set the stage for a potential breakout above the all-time high of $50 per ounce last reached in 2011, according to Otavio Costa, macro strategist at hedge fund Crescat Capital.

"Silver is just catching up to gold," Costa said in an exclusive interview with Benzinga, noting that the metal's decade-long underperformance is poised to reverse.

Since early June, silver prices have surged over 10%, breaking above $36.80 on Monday and reaching levels last seen in February 2012. The iShares Silver Trust SLV has now risen 25% year-to-date through June 9, perfectly matching SPDR Gold Trust‘s GLD performance.

Costa indicated silver is now entering a critical phase that could resemble historical boom cycles.

Silver-To-Gold Ratio Signals More Room To Run

When gold leads, silver then follows.

Silver is "the next one in line," Costa said.

The grey metal is trading at roughly 100 ounces per ounce of gold—a level Costa calls historically unsustainable and a clear setup for a sharp reversal.

"We've only seen this a few times in history," he said. "Every time, the ratio eventually collapses."

According to the expert, silver is now transitioning from being viewed strictly as an industrial commodity to being increasingly perceived as a monetary hedge—just as gold demand from central banks accelerates.

"Silver has been a monetary metal in the past, and once it starts moving higher, it becomes less of an industrial and much more of a monetary metal," he said.

Silver At $50? The Next Key Resistance

Costa told Benzinga that the metal's next technical battleground is the $50 threshold—a level reached during the 2011 rally and in the late 1970s Hunt Brothers episode.

"There's no such thing as a triple top," he said.

"Once silver breaks $50, we enter price discovery. Nobody knows where it goes from there."

Market Dynamics Say Demand Sharply Outweighs Supply

Costa highlighted the lack of new silver discoveries and project development. "There are no major supply additions coming that will significantly alter the market in the next few years," he said.

At the same time, industrial demand—especially for solar panels—is rising rapidly.

"The demand factors have changed quite significantly," Costa said.

Solar now represents 15% to 17% of global silver demand, a sharp increase from the low single-digit percentages of just a few years ago.

Crescat Capital owns San Cristobal, one of the largest silver mines in the world, and Costa highlighted unusual pricing behavior in the physical market.

He said Chinese buyers have been paying premiums of $1 to $3 per ounce on silver concentrate over the past 6 to 12 months.

"That premium wasn't reflected in the futures market—but now we're starting to see it," he said.

"I'm already invested in silver. But you never have enough of it."

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Image created using artificial intelligence via Midjourney.