Silver, the Road to $350—The Current State of the Commodity Supercycle

Commodities are overlooked in most investors' portfolios. Aside from gold and silver, they are rarely discussed in financial YouTube channels or similar media. They are an asset class that tends to be pushed to the back burner as 'something hard to understand,' unlike stocks or bonds.

Today, I would like to look at the current state of commodities, focusing on silver.

Chapter 1: What is a Commodity Supercycle?

Definition and Basic Mechanism

A commodity supercycle is a phenomenon where commodity prices continue to rise broadly over multiple years. It is not caused by short-term economic fluctuations, but by structural shifts in supply and demand.

A typical cycle duration is 8 to 15 years. Price increases are not limited to specific products but appear across multiple commodity sectors. The main drivers are major changes such as global industrialization, shifts in monetary and financial systems, changes in energy structures, and geopolitical events.

Signs that 'We Are in a Supercycle Now'

Whether we have entered a supercycle can be determined by the following points:

• Commodity prices continue to rise over multiple years, even with periodic price adjustments (temporary declines)
• Supply shortages are structural and persistent
• Demand is expanding due to new factors
• The monetary and financial system is becoming unstable, increasing demand for real assets

Since 1971, there have been two clear supercycles.

• 1971–1980 cycle: Driven by the end of the gold standard and the oil shocks
• 2000–2011 cycle: Driven by China's rapid industrialization

All of these were underpinned by structural changes different from mere economic recoveries.

Why Focus on Silver?

Silver differs from other commodities in that it simultaneously possesses an aspect as currency and an aspect as an industrial metal. While it is considered a store of value like gold, it is also an essential material for modern industry, such as solar panels, electric vehicles, and semiconductor manufacturing.

Chapter 2: How Did Silver Move in Past Supercycles?

1971–1980: The Decade When Silver Showed Overwhelming Strength

In the 1971–1980 supercycle, silver rose from an annual average of about $1.50 (1971) to about $20.63 (1980), with prices rising at an annualized rate of about 34%. The S&P 500 return for the same period was about 6.5% per year. This means silver's annualized return reached about five times that of the S&P 500.

For those who invested in stocks, assets increased in nominal terms over these 10 years, but when inflation is considered, the real return was negative. Because the inflation rate exceeded the nominal return, it can be said that it was a decade where assets decreased in purchasing power terms.

2000–2011: China's Industrialization Pushed Silver Up

In the 2000–2011 cycle, silver recorded an annual increase of about 18%. During this period, the S&P 500's annualized return was about 2.5%.

As a result of China's continued large-scale investment in infrastructure and manufacturing, demand for metals, including copper, surged. Silver also benefited from this, rising to nearly $50 per ounce at one point in 2011.

Stocks Are Superior During Non-Supercycle Periods

In contrast, stocks are overwhelmingly strong during periods when there is no supercycle.

• 1982–1999: Silver was mostly flat to slightly negative. The S&P 500 had a total return of about 15.5% per year
• 2012–2024: Silver remained at a moderate increase. The S&P 500 grew at a compound rate of over 12% per year

The optimal investment target changes significantly between supercycle and non-supercycle periods. Understanding this alternating pattern is important for portfolio construction.

Long-term Comparison Since 1971

Throughout the entire period since 1971, the S&P 500 has returned about 10.95% per year, while silver's price return is about 7.3%.

The main reason for this difference is that non-supercycle periods have lasted a long time in recent decades. If the past two patterns where supercycles worked in silver's favor are repeated, this gap is expected to narrow.

Chapter 3: Why Portfolio Allocation Is Important

Ignoring cycles leads to significant opportunity costs

If you maintain a portfolio heavily weighted toward stocks during a supercycle, your returns are likely to be lower because you miss out on the benefits during a period when real assets are surging. Conversely, if you are overly concentrated in real assets when there is no supercycle, you miss out on the compound growth of stocks.

Both are inefficiencies caused by "investing without awareness of cycles."

Criteria for determining the onset of a supercycle

There are four reliable signals that indicate a supercycle may have begun:

• Major commodities (especially precious and industrial metals) have been in an upward trend for several years
• Structural supply constraints have emerged (declining ore grades, underinvestment in mining, etc.)
• New or accelerating sources of demand exist (electrification, technology, geopolitical demand, etc.)
• Currency and financial systems are unstable and the environment is favorable for real assets.

When multiple signals appear simultaneously, the likelihood of being in the early stages of a supercycle increases.

The early stages appear uncertain

For some time after a supercycle begins, it feels doubtful, with people asking, "Is this really happening?" Even as prices rise, skepticism that it is "just a temporary increase" is common, and many investors miss the boat.

The most powerful rallies often occur when long-term underinvestment accumulates and multiple demand factors coincide. By the time everyone recognizes that the cycle has become "obvious," most of the gains are already over.

Chapter 4: A New Supercycle Is Now Underway

Movements starting from 2025

With multiple factors converging, it is believed that a new commodity supercycle has been underway since around 2025. Silver has already shown a very strong rise entering 2025. Base metals, led by copper, continue to show firm movement amid supply tightness. And the strength of this recovery is also being reflected in commodity indices as a whole.

Four structural factors driving this cycle

The driving force behind this supercycle is broad and structural:

• Electrification and the transition to renewable energy: The spread of solar, wind, and EVs is creating sustained demand for metals, including copper
• Rapid expansion of AI and data centers: Large-scale power infrastructure and physical capital investment are required, pushing up metal demand
• Geopolitical tensions and deglobalization: Countries are rushing to secure critical metals from the perspective of supply chain security and strategic stockpiling
• Long-term underinvestment in the mining industry: Past lack of capital investment is now manifesting as supply shortages

These factors are already being reflected in prices and are not of a nature to reverse in the short term.

The factors driving this supercycle have a breadth and depth different from the previous two. This is because energy transition, AI, geopolitics, and supply constraints are all happening simultaneously.

Chapter 5: Why This Silver Cycle Could Be Even Larger

What happens when we apply past CAGRs?

What would happen if the annual growth rate (CAGR) of past supercycles were to continue in this cycle?

If the moderate pace of 2000–2011 (about 18% per year) continues for the next 8–10 years, starting from the current silver price (about $67/oz as of June 2026), the estimated benchmark would be about $250 in 8 years, and about $350 in 10 years. In a more bullish scenario (about 38% per year, similar to 1971–1980), the calculation would far exceed about $700 in 8 years and $1,000 in 10 years.

Of course, this is a reference value that mechanically applies past growth rates and does not predict future prices. However, it is useful as a benchmark for understanding the "scale of the situation."

There are structural problems on the silver supply side

One reason this cycle could be stronger than the past is on the supply side.

In global silver mines, the ore grade (the percentage of silver contained in the mined ore) of existing mines is declining. This means rising mining costs and sluggish growth in production volume. Since developing new large-scale mines takes a lot of time and cost, it is easy for a situation to continue where supply cannot keep up with the rapid increase in demand.

New sources of demand that did not exist in the past

At the same time, new sources of demand that did not exist in past supercycles are being added this time.

• Rapid expansion of solar power generation: Silver is essential for the manufacture of solar panels, and demand is increasing with the global expansion of renewable energy adoption
• Spread of electric vehicles (EVs): The amount of silver used per EV is higher than in conventional internal combustion engine vehicles, and as adoption progresses, industrial demand for silver will increase
• Investment in AI infrastructure: Silver is also used as an important material in data centers and semiconductor manufacturing

All of these demands are expanding from relatively low levels and have the potential to accumulate over the long term.

Currency and geopolitical uncertainties are added

In addition to increased demand and supply constraints, there are also factors of currency and geopolitical instability.

In phases where confidence in fiat currency wavers, demand for physical assets such as gold and silver rises. During periods of high geopolitical risk, central banks and institutional investors in various countries tend to increase their holdings of physical assets. In such situations, silver possesses a unique characteristic not found in other metals: the simultaneous rise in demand for industrial metal use and monetary store of value.

Chapter 6 Summary: What Should We Consider Now?

The Supercycle is a Recurring Historical Phenomenon

The commodity supercycle is not a theoretical concept, but a recurring phenomenon shown by data since 1971. Within this, silver has consistently demonstrated outstanding performance.Silver has delivered exceptional returns during supercycle periods, while stocks have held the advantage during other times—this alternating pattern is consistent.

Currently in the Early Stages of the Cycle

We are currently considered to be in the early stages of a new supercycle supported by three powerful structural trends: energy, technology, and supply shortages.

• The transition to renewable energy is a multi-decade trend
• Investment in AI infrastructure has only just begun
• Underinvestment in the mining industry cannot be resolved overnight

With these factors overlapping, it is difficult to envision a scenario where the supply-demand environment for silver deteriorates in the coming years.

The Importance of Positioning

If the previous decade (2012–2024) was an era of stock dominance, the next 8 to 15 years could be a favorable era for commodities, especially silver.

As past supercycles have shown, if historical patterns and unique current demand factors overlap, silver could realize significant price appreciation in the coming years. You may end up missing an opportunity of a scale rarely seen even on a multi-decade basis.

Silver's supercycles have brought returns significantly outperforming stocks on both previous occasions. Now that the four conditions of energy transition, AI, geopolitics, and supply constraints have converged, the probability of the same thing happening is not low.

Is it not time to seriously consider introducing commodities, starting with silver, into a portion of your portfolio?