MW Silver tops gold as investors' go-to hedge against trade tensions

By Myra P. Saefong

Silver benefits from a 'dual advantage' as an asset that combines hedging and growth characteristics, says analyst

Silver's a standout among precious metals, outpacing gold's gains so far in 2026.

Silver has outpaced gains for gold so far this year and looks to be the "hedging asset" of choice for investors, with prices set to notch a 10th straight monthly gain - the longest such streak on record.

"Trade escalation typically revives investor appetite for hedging assets, particularly in a global environment marked by slowing growth and rising geopolitical polarization," said Rania Gule, senior market analyst at XS.com.

Trade risks can contribute to a slowdown in economic growth and weaken silver demand, but silver is a "dual-natured metal," Gule said. It benefits from both investment and industrial uses - and that's a key reason why it has been more of a go-to hedge than gold lately.

Precious metals often benefit as investments of choice to offset potential losses in investor portfolios. So far this year, however, the nearly 30% gain in silver futures (SI00) has outpaced gold's (GC00) 20% rise. Silver is also poised to end February with a gain - the 10th straight monthly rise and longest such streak of gains on record, according to Dow Jones Market Data.

Trade risks and geopolitical tensions are supportive for the silver market, said Bas Kooijman, CEO and asset manager of DHF Capital, in Wednesday commentary.

Washington implemented a temporary 10% global tariff, with discussions reportedly under way to raise the rate to 15%. These developments have "revived fears of renewed trade confrontation, driving flows toward safe-haven assets," he said.

At the same time, persistent tensions in Eastern Europe and security concerns in Mexico are reinforcing the appeal of precious metals - and investors are closely watching the upcoming third round of U.S.-Iran nuclear negotiations in Geneva, where any breakdown could reignite regional instability, said Kooijman. "Silver could strongly benefit from any additional uncertainty at a global level."

Still, prices for silver have fallen nearly 21% from their record settlement of $115.504 on Jan. 26. This included a drop of 31% on Jan. 30, the biggest one-day drop since March of 1980.

Silver "differs from gold in that it is more sensitive to the economic cycle, given its close link to industrial demand," said XS.com's Gule. And, "while a trade shock that heightens concerns about supply chains may support prices in the short term through safe-haven flows, it simultaneously raises questions about the outlook for global industrial activity in the medium term."

That partly explains the "swift transition from aggressive buying to organized profit taking," she said.

Keep in mind, however, that estimates from the Silver Institute and Metals Focus show that the global silver market is expected to record a supply deficit this year. They forecast a deficit of 67 million ounces for 2026, which would mark a sixth consecutive year of deficit.

That's "far from marginal," and provides a solid medium-term floor for prices, especially given rising demand from artificial-intelligence data centers, electric vehicles and semiconductor manufacturing, said Gule. The "structural momentum" from those sectors is unlikely to slow meaningfully, even in the face of escalating trade tensions.

Gule said that silver is "transitioning from a news-driven market to a fundamentals-driven one."

Silver saw an initial surge toward $89 in mid January. That was an immediate reaction to an urgent political catalyst, said Gule. The markets were concerned about threats of a U.S. military strike on Iran, in the wake of the arrest of Venezuelan leader Nicolás Maduro.

The path ahead of silver, however, will be "shaped by a more complex mix of monetary policy, inflation expectations, and U.S. dollar dynamics," said Gule.

Read: Trump digs in his heels on tariffs - with major implications for the U.S. dollar

Current expectations suggest that the Federal Reserve will keep interest rates unchanged in March, with markets pricing in roughly 60 basis points of easing over the remainder of the year, she said. If that happens, the monetary backdrop would become "increasingly supportive for precious metals, including silver, as the opportunity cost of holding non-yielding assets declines."

U.S. Treasury Secretary Scott Bessent, meanwhile, has reportedly attributed the extreme volatility in precious metals to speculative activity among Chinese traders. Speculation should not be overlooked, said Gule, as it "underscores the role of short-term liquidity in amplifying price swings."

She said that the market is not witnessing a price bubble, but rather a "speculative cycle unfolding" within a broader uptrend in the face of a persistent supply deficit and rising industrial demand.

'Silver remains an asset that combines hedging and growth characteristics - and it is this dual advantage that...will sustain its appeal in the next phase.'Rania Gule, XS.com

Given all of that, silver "has not lost its luster. It's simply recalibrating," Gule said. Current volatility is "natural" in a market reacting to major political developments - and that does not negate the broad upward trend unless there is a fundamental shift in monetary policy or sudden collapse in global industrial demand.

"In an increasingly uncertain world, silver remains an asset that combines hedging and growth characteristics - and it is this dual advantage that, in my view, will sustain its appeal in the next [trading] phase."

On Wednesday, May silver (SIK26) climbed 4% to settle at $91.63 an ounce on Comex, up almost 17% for the month. Prices ended Wednesday at their highest since Jan. 29.

-Myra P. Saefong

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February 25, 2026 15:00 ET (20:00 GMT)

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