Are Russia & Other BRICS Nations Now Turning to Silver?

With silver prices having broken out to 14-year highs, folks are asking where all the demand is coming from. It's certainly not retail investors in the U.S. Even European dealers report slow sales.

ETFs is one source of new silver demand this year, with big inflows into silver backed funds showing up in the first half of 2025. But more seems to be going on -- and one theory is that the Russian government is leading a broader move by governments into the silver market

To be fair, silver has been due for a rally for quite a while. While it was up 20.5 percent in 2024, most people felt silver underperformed, as it remained well below its all-time highs even as gold set record after record. Even with those gains, the gold-silver ratio grew historically wide, at over 100-1, signifying that silver was significantly underpriced compared to gold.

Silver began to rally last month, and it’s likely not a coincidence that the 2025 Russian budget called for an allocation of 51.5 billion rubles to buy precious metals and gemstones, and the plan indicated that silver would be added to the state fund’s mix of assets for the first time ever.

While hard data is difficult to come by, especially given the sanctions imposed on the Russian government, it is highly possible that Russian buying is helping boost the silver price.

Writing for Forbes, Australian journalist Tim Treadgold noted that the silver price has outperformed gold ever since Russia made this announcement at the end of September.

The Russian central bank didn't indicate how much silver it might acquire, and it hasn’t released any new information since the budget came out last fall, but Treadgold said he thinks the central bank has waded into the silver market.

Russia could also be stockpiling silver for industrial and military use in an effort to shield itself from supply constraints and volatile prices.

At one time, silver played an important role in the global economy, but it was gradually demonetized over the course of the 19th and 20th centuries.

In the early 1870s, Germany shifted from silver to gold after unification, and that sparked a global move toward gold. In 1873, the Coinage Act ended the free coinage of silver, putting the U.S. on a path toward a gold-only standard. In 1965, President Lyndon Johnson removed silver from U.S. coins.

Russia’s decision to include silver in its state fund could prove significant, especially if other countries follow suit. This could even lead to a re-monetization of silver.

Industrial offtake accounts for more than 50 percent of silver demand, but at its core, it is a monetary metal. Silver's dual role as both an industrial commodity and a potential financial asset make it more attractive to governments seeking to hedge against economic volatility.

Treadgold of Forbes magazine speculated that Russia’s allies could follow suit, including the possibility of the BRICS bloc turning to silver as part of its efforts to bypass the dollar now that gold has become so expensive by comparison.

Regardless, there is no doubt that there is growing interest in silver. Investment demand surged through the first half of 2025, with inflows of silver into ETFs eclipsing the total for the entirety of 2024.

And it appears that there is still plenty of upside. Even with the recent rally in silver, it remains historically underpriced based on both technical and supply-and-demand dynamics.

Turning to market action this week, gold and silver have traded mostly sideways, and look to be ending the week right about where they ended last week. Gold is trading here in the $3,360 range and silver looks like it may close the week near its 14 year high of about $38.50.

The platinum group metals fared a little better, both rising in price week over week. Platinum is trading over $1,450 and palladium settling at $1,310 as of this Friday afternoon recording.

*******