“Silver prices won't come down.” Remember aluminium

“#Silver prices won’t come down; keep investing.” That was a friend’s confident claim, backed by a logical argument: rising industrial usage means rising demand.
To counter him, I shared the story of #Aluminium.
In the 1800s, Aluminium was more expensive than #Gold, not because it was rare, but because it was extremely hard to extract. In 1884, the #WashingtonMonument was capped with Aluminium, and that small piece reportedly cost around $100, a fortune in 1884.
Today, the same amount of aluminium would cost just a few dollars.

What changed? Technology!
The discovery of the Hall–Héroult in 1886 made Aluminium extraction cheap, scalable, and energy-efficient. Once supply exploded, prices collapsed, despite demand increasing.
Silver could follow a similar path.

As prices rise:
- Mines and extraction methods that were earlier uneconomical suddenly become viable
- Scrap supply increases
- Long-held silver starts coming back into circulation

We’ve seen the same dynamic in crude oil. Beyond a certain price (roughly $40–60 per barrel), shale oil extraction becomes economical. New supply enters the market, and prices cool off.

The key takeaway is that demand matters, but supply always responds to price. That response is what limits runaway rallies in most commodities.

Side note: I tried convincing my mom to sell old, broken silver utensils and jewellery. Her reply was instant - “We sell silver only as a last resort.”
So yes, Indians though hoard tonnes of Silver, it will remain locked away for generations 😄