Explosive level surpasses gold! Market heavily bets: Supply shortage supports bull market, silver and copper continue to hit new highs after reaching new highs.

Currently, silver and copper are considered the most valuable metal varieties for investment, with their potential possibly exceeding that of gold. This trend is driven by supply concerns and the growing demand in the electrification and clean energy sectors. Market analysts point out that as we enter 2026, the focus of investment is shifting from gold to these industrial metals, making it a promising trade. As we approach 2026, silver and copper have replaced gold as popular metal trading varieties, with institutional investors and retail traders preparing for a potential record-breaking uptrend. Silver prices have nearly doubled this year, with most of the gains occurring in the past two months due to historic supply tightness in the London market. The surge in demand from India and the emergence of silver-related ETFs have also played a role in driving prices up. Although the tight supply situation has eased in recent weeks as more metal is being shipped to London vaults, other markets are still facing supply shortages, with China's inventories at their lowest level in a decade. Analysts at Marex Group, such as Ed Meir, suggest that the rise in silver prices is accompanied by higher volatility. Meir said, "If you look at the charts, you'll see that this uptrend is steeper than past ones, more parabolic. And this time, buying pressure is more concentrated and shorter in duration." Recently, silver has outperformed gold. Since gold prices hit a record high on October 20th, gold prices have remained relatively stable while silver prices have risen over 11%, reaching new highs, and copper prices have also risen nearly 9%. In tracking the largest ETF for silver, iShares Silver Trust, the implied volatility of options rose to its highest level since the beginning of 2021. The fund attracted nearly $1 billion in inflows over the past week, surpassing the inflows of the largest gold fund, further supporting spot prices. Trevor Yates, Senior Investment Analyst at Global X ETFs, noted that Western investors had significantly under-allocated to precious metals and had been pouring into silver ETFs in recent months. As investment allocations normalize, there is still significant room for further inflows into such funds. Trading in silver futures and options on the New York Mercantile Exchange has seen a buying frenzy as investors seek to hedge against market volatility and further upside risks. Retail traders have been flooding into the market, with data from the Chicago Mercantile Exchange showing that five-day average trading volumes for mini futures contracts reached levels seen only in mid-October. One example of this frenzy is the "lottery-style" options trading strategy: last Wednesday and Thursday, over 5,000 lots of 80/85 call spread options for the February COMEX delivery of silver traded, with a total value of 25 million ounces of silver. These trades aim to profit from the enthusiastic uptrend at the start of the new year. It is certain that higher volatility requires larger price swings to support, especially to propel prices into unknown territories. As of December 2nd, silver prices were 82% above their five-year average, bringing them close to the annual deviation from the average since 1979. Meir notes that it is difficult to determine when the upward trend in silver prices will end. He said, "When the chart looks like this, there are no resistance indicators. The top price may be $85, or it may be $60." While copper may have lower financial attributes, analysts predict a supply shortage in the coming years due to the increasing demand for electricity to power AI data centers and clean energy projects. In the past week, copper prices on the London Metal Exchange rose to historic highs of over $11,600 per ton, while the median volatility of NYMEX March contracts rose by over 4 percentage points, with the largest open interest concentrated in call options above the current market price. Since US President Trump announced tariffs on copper in February to increase US supply, there have been significant changes in copper prices and trade flows. This decision caused futures prices in New York to surpass those in London, leading to record growth in US imports. Traders such as Mercuria, Trafigura, and Glencore have profited from this arbitrage opportunity. StoneX Financial Trader Xiaoyu Zhu stated that as copper has bullish fundamental factors, the downside potential for its price will be limited. He also pointed out that supply restrictions due to production disruptions in major mines are occurring at a time of increasing demand for electric vehicles and energy transition. In late July, the unexpected lack of tariffs on copper primary products resulted in a decrease in copper supply. However, in recent weeks, traders have been ramping up copper shipments as Trump promised to reconsider his plan to impose tariffs on primary copper. Greg Sharenow, Portfolio Manager at The Pacific Investment Management Company, stated that the global trade balance has tightened significantly due to a large amount of raw materials moving to the US, primarily due to actual or potential tariffs. The price difference between US raw materials and global benchmark prices has created a favorable incentive mechanism to keep raw materials in the US. Part of the reason for the global supply tightness in certain metal markets (both precious metals and copper markets) is due to arbitrage trading. Sharenow said, "It's hard to say how long this situation will last, so even if these commodities see a 10% or 15% pullback, it won't affect their long-term trends."