The Cash Silver Index has skyrocketed during 2025, nearly hitting $80 during Friday's buying frenzy.
Interestingly enough, an earthquake rattled Taiwan, the world's leader in high-tech electronic production, over the weekend.
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Late last week, a friend from central Illinois sent me an interesting message. He had attached an AI answer to the search question,” Is silver used in AI data centers?” As if patting itself on the back, AI answered with, “Yes, silver is used in AI data centers, primarily due to its superior electrical conductivity, which makes it essential in components like high-density circuit boards, memory chips, edge computing devices, and other electronic hardware critical for AI processing. Its role extends to supercomputers and advanced electronics where efficient power transmission and corrosion resistance are key. The growing demand from AI infrastructure has even contributed to rising silver prices and concerns in recent years.”
Whew!
My friend, being much more to the point than AI, added, “Thoughts?”
(It was at this point in writing the piece where I took a break writing, trying to think of an analogy to make the point of something being an integral part of various products that lead to the object in question. I came up blank. If you think of something, feel free to share it in the Comments section.)
Think of it this way, silver, due to its “superior electrical and thermal conductivity” (thank you AI, ironically enough), is a key component in electronics, including everything mentioned as critical hardware for AI processing. Therefore, if the demand for supercomputers and advanced electronics to push AI forward, not to mention EV (electric vehicles), almost globally except for the United States (cue The Flintstones’ them song), and solar PV (photovoltaic, converting sunlight into electricity), then we can say the exploding AI industry is indeed part of the increase in demand for silver but not the main factor.
Last August, I talked about how silver had all the characteristics of a demand driven market, with a little short-supply frenzy thrown in for good measure. Here, the key distinction is a short-supply situation tends to end at the next harvest (agriculture commodities, weather markets, etc.). We can look at nearly any market in the Softs sector to see how these play out. The bottom line is price changes are viewed as shorter-term, usually ending with a spike of some sort. A demand market is different. By definition it means new demand is created, pulling down steady to sometimes growing supplies, creating higher expected prices over a longer period of time. We saw this with the ethanol boom in the mid 2000s when the National Corn Index saw its price range change from roughly $1.50 to $2.50 per bushel up to $3.00 to $8.00. For the record, silver’s Cash Index (SIY00) was up 7.5% for the day at last Friday’s close, up 18% for the week, up 40% for the month, and up 174% for 2025.
With another holiday-disrupted week ahead of us, things could get chaotic again following the 6.6 magnitude earthquake that hit Taiwan Saturday. Why does this matter? Taiwan, aka the Republic of China (ROC), is the “undisputed leader, producing over 60% of global chips (no, not potato) and most advanced ones…”. Our internet search shows another interesting tidbit. Just below Taiwan (ROC) on the list of largest producers of advanced electronics is China, aka the People’s Republic of (PRC), described as, “Rapidly growing, second-largest producer…”. Also on the list, interestingly enough, is the United States with its description reading, “Strong in chip design (NVIDIA, AMD), EDA software, and intellectual property…”.
Given the ongoing situation between the US and China (PRC), with Taiwan (ROC) one of the countries caught in the middle, it’s not surprising the silver Index drew within a few dimes of $80 late last week. And as far as I know, the Hunt Brothers are nowhere to be found with this one.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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