Latest / The Commodities Economy with Fexingo: Oil, Gold, Wheat, and Raw Material Markets / Why Silver Is Outperforming Gold in July 2026
Transcript
- Lucas: Gold is hovering near forty-one hundred dollars an ounce this morning, up almost three percent on the week. That's the headline everyone's watching. But if you look at the precious metals complex more carefully, there's a much more interesting story happening in silver. Luna: Silver's been quietly crushing it. Up over six and a half percent in the last five days. That's more than double gold's move. Lucas: Exactly. And the question is why. Silver has always had this split personality — half monetary metal, half industrial commodity. When gold rallies on geopolitical fear, silver usually follows, but not always at the same pace. This time silver is leading. Luna: So what's different now? Is it the industrial side finally pulling ahead? Luna: That's a huge demand driver. And it's not just solar — semiconductors also use silver in certain bonding processes, right? Lucas: Right. And we've got TSMC building those advanced fabs in Arizona, which is a very silver-intensive process. Every new chip fab requires significant amounts of silver for thermal pastes, connectors, and packaging. The AI build-out is a silver story too. Luna: Meanwhile gold just sits in vaults. It doesn't get consumed. So you've got this structural demand tailwind for silver that gold simply doesn't have. Lucas: That's the key distinction. Gold is purely a store of value — it responds to real yields, dollar weakness, geopolitical fear. Silver does all of that, plus it gets physically used up in things like solar panels and electronics. And right now, those industrial channels are booming. Luna: Copper is also up almost five percent on the week. So it's not just precious metals — the whole industrial complex is moving. Lucas: Copper at six fifty-two a pound is a big deal. And silver often moves in sympathy with copper because they share mining geology — a lot of silver comes out of the ground as a byproduct of copper and lead-zinc mines. So when copper miners are ramping up, silver production gets a boost, but if there are supply disruptions, both metals feel it. Luna: Iran tensions are definitely adding a geopolitical premium to all of this. The Strait of Hormuz headlines have oil spiking, and precious metals are getting a safe-haven bid too. Lucas: No question. Brent crude above ninety-three dollars, WTI at eighty-six sixty — those are elevated levels that reflect a real risk premium. But for silver, the geopolitical bid is layered on top of genuine industrial demand. That's a powerful combination. Luna: Let me push back a little. Silver is notoriously volatile. It can rally hard and then correct just as fast. Is this move sustainable, or is it just a speculative spike in a nervous market? Lucas: It's a fair question. Silver's history is full of blow-off tops. But what's different this time is the nature of the demand. Solar and semiconductor demand aren't speculative — they're backed by policy and capital expenditure. The Inflation Reduction Act in the US, the green energy push in Europe and China — those are multi-year, not multi-week, drivers. Luna: That said, if Iran tensions de-escalate suddenly, a lot of the geopolitical premium could evaporate quickly. Silver could drop ten percent in a week. Lucas: It could. But I'd argue that the industrial floor is higher than it's ever been. Even without the fear trade, silver has a bid from real economic activity. Gold doesn't have that. So the risk-reward might actually favour silver over gold right now. Luna: Speaking of keeping this show going — and ad-free — we should mention that episodes like this one are possible because of listener support. Lucas: Yeah, we deliberately don't run ads. If you find value in walking through the economy with us, you can support that choice at buy me a coffee dot com slash fexingo. It's a simple way to keep the show independent. Luna: And it really does make a difference. So, back to silver — one thing I'm watching is the gold to silver ratio. It's currently around sixty-nine, meaning it takes sixty-nine ounces of silver to buy one ounce of gold. Lucas: That ratio has come down from about eighty-five two years ago. Historically, when the ratio is above eighty, silver tends to be undervalued. Below sixty, silver might be getting frothy. We're in the middle, which suggests there could be more room to run. Luna: What would it take for silver to break out to the upside decisively? A weaker dollar? A surprise Fed pivot? Lucas: Both would help. But I think the biggest catalyst would be a sustained pick-up in global manufacturing PMIs. If we see factory activity expanding in the US, Europe, and China simultaneously, silver's industrial demand leg really kicks in. Copper would rally too, and silver would ride that wave. Luna: Speaking of which, we've seen some mixed economic data lately. CPI came in at three hundred thirty-two point six for June, down from May. That's disinflation, which is good for bonds, but it also means the Fed might not cut as aggressively. Lucas: Right. Lower inflation typically hurts gold, but silver might be more resilient because its industrial demand is tied to real growth, not just monetary policy. If the economy is growing but inflation is cooling, that's actually a sweet spot for industrial metals. Luna: So silver could be the better hedge in a soft-landing scenario? Lucas: I think so. Gold shines in a hard landing or a crisis. Silver performs well in a recovery or expansion. Right now, the market seems to be pricing in a soft landing, and silver's relative outperformance makes sense in that context. Luna: What about supply? Are there any constraints on the mining side? Lucas: Global silver mine production has been relatively flat for the last five years — about twenty-five to twenty-six thousand tonnes annually. There aren't many new silver-focused mines coming online. Most of the supply growth comes from copper and lead-zinc byproduct, which depends on those base metal prices being high enough to incentivize mining. Luna: So if copper stays strong, silver supply gets a boost. But if copper weakens, silver supply could actually contract, even if silver demand is rising. Lucas: Exactly. It's a complicated dynamic. But in the near term, with copper above six dollars and still climbing, byproduct supply should be ample. The bigger risk is on the demand side — if the global economy slows sharply, industrial users pull back, and silver could get hit. Luna: Alright, so bottom line for listeners: silver is outperforming gold because it's getting a dual boost from safe-haven buying and industrial demand. The sustainability depends on whether that industrial demand holds up. Lucas: I'd add that silver is probably a better barometer of real economic health than gold is. Gold tells you about fear. Silver tells you about activity. And right now, silver is saying the global economy is more resilient than many people think. Luna: That's a good note to end on. Thanks, Lucas. Lucas: Thanks, Luna. We'll keep watching the silver to gold ratio and the industrial data next week.