Elon Musk has issued a stark warning to global manufacturers, stating they could suffer significant consequences from a dramatic surge in the price of silver, which reached unprecedented levels this month.
Record-Breaking Rally for Precious Metals
The price of silver rose sharply throughout December 2025, forming part of a wider rally across precious metals. This surge saw both gold and platinum also climb to record peaks on Boxing Day. Silver achieved a landmark price of $79 (£58) per ounce last Friday, a new all-time high. This represents a steep climb from $56 at the beginning of the month and just $29 an ounce at the start of the year.
Market analysts, including Tony Sycamore from IG, point to a "generational bubble" in silver as capital floods into the precious metals sector. The rally is underpinned by expectations of multiple US Federal Reserve interest rate cuts in 2026, which drives demand for hard assets as a hedge against inflation. Robust buying from central banks and private investors has further fuelled the rise.
Supply Fears and Industrial Demand
A critical factor behind the spike is a severe structural imbalance between supply and demand. New restrictions on silver exports from China, effective 1 January, have sparked significant supply concerns. Furthermore, geopolitical tensions have increased appetite for traditional safe-haven assets like silver.
Elon Musk highlighted the industrial risk, posting on his platform, X: "This is not good. Silver is needed in many industrial processes." The metal is essential in several high-growth sectors, including:
- Electrification and solar power panels
- Electric vehicle manufacturing
- Data centre infrastructure
Soaring demand in these areas is rapidly depleting global silver inventories.
Broader Market Context and Consequences
According to reports from Bloomberg, a substantial portion of the world's readily available silver is currently held in New York. This is pending the outcome of a US Department of Commerce probe into whether imports of critical minerals, including silver, pose a national security risk. The review could lead to new tariffs or trade restrictions.
The precious metals boom is historic. Gold and silver are both on track for their best annual performance since 1979. Gold has risen over 70% this year to exceed $4,500 per ounce. Platinum, crucial for automotive catalytic converters alongside palladium, saw a 5.3% jump on Friday to $2,338.20 per ounce, recording its strongest weekly rise ever. Platinum has gained roughly 170% in 2025, driven by tight supply and shifting investment demand.
The combination of monetary demand and critical industrial use has placed silver in a uniquely volatile position. Musk's intervention underscores the potential for real economic disruption if high prices persist, affecting supply chains for green technology and electronics vital to the UK's industrial and environmental goals.
