The recent white metal market has given the industry a lesson: on January 14th, it first broke above $90 per ounce and has been oscillating around this high level. Gold hasn't been idle either, pushing aggressively at historic highs, with the entire precious metals sector entering a phase of high volatility and strong trends. This wave of gains looks fierce, but the underlying logic is actually quite clear—interest rate expectations, risk aversion sentiment, and chasing buying funds all exerting force simultaneously have driven prices from a broad rally to an accelerated rise.

Let's first look at the first layer: the re-pricing of interest rates and the dollar. The latest US inflation data was not as fierce as expected, and the market has started to bet on the Federal Reserve cutting interest rates this year. Once rate cut expectations emerge, the opportunity cost of interest-free assets (such as gold and silver) decreases, making them more attractive. Both the dollar and real interest rates are expected to decline, which is generally positive for precious metals priced in USD. Silver, in particular, is very sensitive—its volatility is higher than gold, and when funds use silver to express views on rate cuts and inflation rebalancing, the impact is even more pronounced.

The second layer involves hard constraints on supply. There has long been discussion about structural shortages in the silver market, which is not a new topic. The problem lies in the fact that a large portion of silver comes from associated mines, and supply has a significant lag—even as silver prices soar, it cannot immediately mobilize additional production to fill the gap. This makes inventory changes particularly sensitive to price movements.

The third layer is the support from industrial demand. Silver is not just an investment asset; it also has important industrial attributes.