This hedge-fund veteran who pushed for silver in February now warns of short-term risks

By Jules Rimmer

'This is where it's fun. This is where it's scary,' says veteran commodities analyst Alexander Campbell.

Silver has rallied by 156% in 2025 but it's jumped by a quarter in December alone.

The former head of commodities at hedge-fund giant Bridgewater says there are several short-term hurdles facing silver that investors may wish to pass before buying.

This is how Alexander Campbell, formerly a global macro investor at Bridgewater, now chief executive and founder of Black Snow Capital, surveys the trading scene in silver (SI00), the commodity that has rallied by around 30% in December alone.

So far in 2025, silver has delivered a 156% return but dropped on Monday after registering on Friday its largest one-day dollar gain on record. In February, Campbell had argued that demand for solar energy had already pushed the silver market into a structural deficit.

Those short-term hurdles to be negotiated are serious, Campbell concedes in a Substack posting. First and foremost for traders is the possibility of sales for tax purposes once trading recommences in the new year and positions have been held for more than twelve months.

Capital gains will be taxed at a lower rate, especially those generated on deep-in-the-money options with a Dec. 31 expiry. Traders may be inclined to hold on for the last three remaining trading sessions of 2025 before banking profits.

Second, Campbell thinks the dollar DXY may perk up in the near-term after the latest GDP print came in strong for third quarter. A stronger dollar acts as a headwind for commodities that are priced in that currency. He also notes the Chicago Mercantile Exchange has raised margin requirements on trades in silver, effective Dec. 29. This reduces leverage and speculative appetite.

Campbell goes on to recognize that many commentators are highlighting the "overbought" trading profile of silver and also how the meteoric rise in the price of silver this year may well encourage its substitution with copper in industrial usage.

All these factors taken into consideration, however, Campbell's enthusiasm for silver remains undimmed. He takes on the issue of copper substitution head on and finds that while there are longer-term arguments in favor of this trend, the payback period for switching a facility from silver to copper (HG00) is around 18 months at present and too long for solar manufacturers to justify the investment required.

Moreover, Campbell notes the solar industry, a major demand source for silver, still breaks even with silver at $134 per ounce, around 70% higher than spot.

The solar industry, a structural driver of the price of silver, has seen its profitability decline as silver rallied but it breaks even up at $134/oz, still some 70% higher than now.

Most significantly on the trading horizon is the export licensing China will impose on January 1. As a major net exporter of silver, China's 121 million ounces of annual production now requires government permission.

Campbell regards the premium commanded by physical silver at present as highly significant. He observes physical trading at $91 per ounce in Dubai and $85 per ounce in Shanghai versus COMEX futures, now at $75. Campbell makes the point "when the physical diverges so sharply from the paper like this, one of them is wrong and historically, it's not physical."

The backwardation seen in pricing for physical silver in London's over-the-counter market at present - whereby short-term or spot pricing is higher than forwards - is the highest in decades, according to Campbell. Meanwhile, options markets are pricing tail risk to the upside.

Technical considerations also strengthen the case for higher silver prices given positioning data from the Commodity Futures Trading Commission revealing no extremes, and "there's fuel left" while exchange-traded funds investing in silver like the iShares Silver Trust SLV are still catching up with demand.

The real fundamental drivers for silver, though, as Campbell sees it are the "inelastic" solar industry demand (290 million ounces in 2025, 450 million ounces by 2030) and data center demand. "Every AI query needs electrons. The marginal electron is silver. Solar needs silver," he says.

-Jules Rimmer

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12-29-25 0722ET