Latest / The Commodities Economy with Fexingo: Oil, Gold, Wheat, and Raw Material Markets / Why Silver Is Suddenly Outshining Gold in July 2026
Transcript
- Lucas: Gold is up four percent this week — that's the headline everyone sees. Four thousand, one hundred eighty-seven dollars an ounce. But if you scroll down the commodity board, there's a metal that's doing double that. Luna: You're looking at silver. Lucas: Silver's up eight percent in five days. Sixty-two eighty-one an ounce. And the question isn't really why gold is rallying — we know that story, rate cuts, geopolitical uncertainty, the Iran funeral situation. The question is why silver is rallying even harder. Luna: So what's different about silver? It's usually just gold's more volatile little sibling. Lucas: That's the common framing, and it's not wrong — silver does tend to amplify gold moves. But here's the thing: silver has an industrial demand driver that gold simply doesn't. About half of annual silver demand comes from industrial applications. Solar panels alone consumed over two hundred million ounces last year. Electronics, batteries, medical devices — silver is a critical input in all of them. Luna: So when you get a gold rally driven by macro fear, silver gets pulled along, but it also gets a boost from actual economic activity. Lucas: Exactly. And right now, that industrial leg is looking pretty sturdy. Look at copper — it's up two percent this week as well, six twenty-two a pound. That's not a flight to safety move. That's real demand. If copper is strong and gold is strong, silver sits right in the middle and gets both bids. Luna: We should talk about the inflation data too. CPI came in at three thirty-four for May, up from three thirty-two point four one the month before. That's still sticky. Lucas: Sticky is the right word. And core CPI, which strips out food and energy, is even stickier at three thirty-six point one. That's actually higher than the headline number, which is unusual. It tells you that underlying price pressures haven't gone away, even as energy prices have softened — crude's down two point eight percent this week, by the way. Luna: So inflation is still a concern, and that's usually good for precious metals as a store of value. But silver's industrial side means it also benefits if the economy isn't collapsing. Lucas: Right. And that's the sweet spot we're in. Not booming, but not crashing. The ten-year breakeven inflation rate is at two point two three percent — basically flat. The market isn't pricing in runaway inflation, but it's not pricing in deflation either. That's a Goldilocks environment for silver. Luna: Let me ask you about the silver to gold ratio. Where are we on that? Lucas: Right now it's about sixty-seven ounces of silver to buy one ounce of gold. Historically, the long-term average is somewhere around sixty to sixty-five. So we're right in the middle of the range. But if you look at the last few years, we've been as high as ninety — that was in 2020, during the covid crash. So relative to recent extremes, silver actually looks a bit cheap. Luna: That's a good point. When the ratio is high, it means silver is undervalued relative to gold. And when it starts to fall, silver tends to outperform. Lucas: Which is exactly what we're seeing this week. The ratio dropped from about seventy-one last month to sixty-seven now. That's a meaningful move. And if you believe we're in a late-cycle environment where industrial demand holds up, silver could continue to narrow that gap. Luna: Before we go further — and I know this is a bit of a tangent, but it connects — one thing I really appreciate about this show is that we don't interrupt the analysis with ads. It's just the data and our take on it. Lucas: That's a deliberate choice. We've always felt that if the content is valuable, listeners will support it on their own terms. So if walking through the economy with us has made something click, there's a way to help keep this ad-free. Luna: It's buy me a coffee dot com slash fexingo. No pressure, just an option for those who find the show useful. Lucas: And it genuinely makes a difference. Now, back to silver — because I want to talk about something that might catch people off guard. The solar story. Luna: Go ahead. I think a lot of listeners don't realize how much silver goes into a solar panel. Lucas: A typical photovoltaic panel uses about two-tenths of an ounce of silver. That doesn't sound like much, but when you're deploying hundreds of gigawatts of new solar capacity every year, it adds up fast. The International Energy Agency projects that solar will account for more than half of all new electricity generation capacity by 2030. That's a massive, structural demand driver for silver. Luna: And it's not just solar. Electric vehicles use about an ounce of silver per car, mostly in the wiring and electronics. As EV adoption grows, that's another steady demand source. Lucas: Exactly. So when you look at silver's price action this week, it's not just a reflex reaction to gold. There are real fundamentals underneath it. The question is whether this is the start of a sustained run or just a catch-up move. Luna: What's your take? I know you're usually cautious on calling trends. Lucas: I think silver has more room to run, but it's going to be choppy. The macro backdrop is supportive — rate cuts are coming, inflation is sticky, and geopolitical risk isn't going away. Iran just began a six-day funeral for Ayatollah Khamenei, which keeps uncertainty elevated. But silver is also volatile. A ten percent week like this one could easily be followed by a five percent pullback. Luna: So it's not a buy and forget kind of trade. Lucas: No. But for anyone who's been watching gold and wondering why silver is lagging — this week is a reminder that silver tends to catch up in bursts. And when it does, the moves can be dramatic. If you're positioned for it, great. If not, chasing a break is risky. Luna: Let's talk about the other metals briefly. Copper is up two percent, as you mentioned. That's consistent with the industrial demand story. Lucas: Copper at six twenty-two is actually near the top of its range for the year. And it's not just silver and copper — look at platinum, which is often overlooked. It's up about three percent this week too. There's a broad bid on industrial metals that goes beyond just the precious metal narrative. Luna: Is there anything in the data that gives you pause? The energy sector is clearly struggling — crude oil is down, natural gas is flat. Lucas: That's the counterargument. If the economy were truly strong, you'd expect oil to be rallying too. But crude is at sixty-eight seventy-eight, down two point eight percent this week. That suggests there's still some concern about demand. So the industrial metal rally might be more about supply constraints than robust demand. Luna: That's a good nuance. Silver mines have been underinvested for years. It's not easy to ramp up production quickly. Lucas: Right. Global silver mine production has been flat to declining for the last five years. Primary silver mines are rare — most silver is produced as a byproduct of copper, lead, and zinc mining. So even if prices rise, supply can't respond immediately. That's a structural tailwind. Luna: So to sum up: silver is outperforming gold this week because it's getting a dual boost — safe-haven demand from the macro uncertainty and industrial demand from solar, EVs, and electronics. The silver to gold ratio is falling, which historically favors silver. And supply constraints mean any demand increase hits prices harder. Lucas: That's the framework. The big unknown is whether the industrial demand holds up if the economy slows more than expected. But for now, silver is the story in commodities. Luna: It's a good reminder that not all rallies are created equal. Sometimes the biggest moves come from the metal no one is watching. Lucas: And that's exactly why we dig into the details. Thanks for listening.