For the first time since 2011, silver has risen above 40 dollars!

The silver market is once again experiencing a highlight moment.

On Monday, September 1, the price of silver broke through the key threshold of $40 per ounce for the first time since 2011, with a cumulative increase of over 40% this year. Currently, spot silver is quoted at $40.33 per ounce, up more than 1.6%.

This round of price increase is in sync with the trends of other precious metals such as gold, platinum, and palladium, with gold also reaching a new high this week since its historical peak in April. Spot gold saw an intraday increase of over 1%, quoted at $3,483.63 per ounce.

Analysts believe that the market's growing bets on the Federal Reserve cutting interest rates at its policy meeting this month are the main driving force behind this round of precious metal price increases. Lower borrowing costs typically benefit non-interest-bearing precious metal assets. The key U.S. employment report to be released this Friday is expected to further strengthen the market's rate cut expectations.

In addition to monetary policy expectations, geopolitical tensions and an uncertain financial environment have also boosted investors' demand for safe-haven assets. Meanwhile, the U.S. Geological Survey's proposal to include silver in the 2025 "Critical Minerals List" has been interpreted by Citigroup as a precursor to potentially imposing high import tariffs, adding new upward momentum to silver prices.

Investors Pour into Silver ETFs

The strong performance of silver is also attributed to its solid supply and demand fundamentals. According to the Silver Institute, against the backdrop of growing global demand for clean energy technologies such as solar panels, the silver market is heading towards a fifth consecutive year of supply shortages.

Strong fundamentals have attracted a large number of investors. Data shows that funds have been continuously flowing into silver exchange-traded funds (ETFs), with August marking the seventh consecutive month of inflows, the longest continuous inflow period since 2020.

According to Bloomberg, concentrated buying by investors has led to a reduction in the inventory of freely traded metals in London, resulting in a persistently tight market.

Policy Catalysts for "Critical Minerals"

Policy developments from Washington have further fueled the rise in silver prices. An article from Wall Street Journal reported that the U.S. Department of the Interior's Geological Survey (USGS) recently proposed adding silver, copper, silicon, and six other minerals to the draft of the 2025 Critical Minerals List, stating that these resources are vital to the U.S. economy and national security.

The draft has now been published in the Federal Register and is open for public comment for 30 days. U.S. Secretary of the Interior Doug Burgum stated that this move aims to provide a roadmap for reducing U.S. dependence on imports and expanding domestic production

Tariff Risks May Become a New Engine for Price Increases

The market quickly captured the potential impact behind this policy signal. An article from Wall Street Insight stated that Citibank pointed out in its latest research report that the inclusion of silver in the critical minerals list may create conditions for the U.S. to initiate a "Section 232" investigation and impose high import tariffs, with rates potentially reaching up to 50%.

Analysts believe that considering the U.S. reliance on silver imports is as high as 64%, the tariff risk is significantly underestimated by the market. The bank emphasized that the current futures premium level does not fully reflect the likelihood of tariff implementation, and once taxes are imposed, it will create considerable arbitrage opportunities for COMEX silver futures.

Based on this, Citibank maintains its bullish expectation that silver prices will reach $43 per ounce in the next 6-12 months and recommends investors hold long positions in COMEX silver