'AI Is Running Into Silver' - And $110 May Only Be The First Signal

Something long ignored in the AI boom is suddenly dictating prices, and silver's explosive move past $110 is flashing a message investors can no longer overlook.

Silver – tracked by the iShares Silver Trust (NYSE:SLV) – broke above $110 on Monday, extending a staggering 260% gain over the past year. The rally marks the metal's strongest rolling 12-month return since 1980.

A growing group of macro analysts believes silver’s move is signaling something deeper — a collision between artificial intelligence and the physical world.

"Silver's message is treasure lies in forgotten investments," Jordi Visser, head of AI Macro Nexus research at 22V Research said in a note to clients on Monday.

"We're at an inflection point where making money in AI requires a completely different playbook."

Chart: Silver Prices Go Vertical As Investors Confront Physical Scarcity

From Software Abundance to Physical Scarcity

For more than a decade, technological progress rewarded abundance. Software scaled effortlessly. Code became cheaper. Cloud infrastructure expanded. Marginal costs fell.

AI accelerated that dynamic.

"The core thesis is scarcity versus abundance," Visser said. "Software has become abundant, coding is everywhere, apps are being built at record pace via vibe coding."

He said agentic AI is now disrupting enterprise software by replacing standardized workflows with customized solutions.

The constraint has shifted.

"Critical minerals like silver, copper and rare earths face structural shortages that will persist for 15 plus years," Visser said.

AI, in other words, is no longer constrained by intelligence. It is constrained by physics.

Why ‘AI Is Running Into Silver’

Every wave of exponential innovation carries the illusion that progress is limited primarily by ideas, algorithms, or imagination. History shows that illusion only holds in the early phase.

Eventually, exponential systems collide with their narrowest constraint.

In AI, that constraint has already begun migrating downward — first from models to compute, then from compute to memory, and now from memory to electricity and materials.

AI systems do not fail because they lack ideas. They fail when physical bottlenecks appear.

"AI systems do not run on energy in the abstract," Visser said. "They run on electricity delivered with extreme precision, density and reliability."

That distinction is becoming critical as AI expands beyond centralized data centers into robots, vehicles and edge devices.

"Electricity plays the same role in the physical world that memory plays in the digital one," Visser said. "It determines whether theoretical capacity can be turned into real performance."

"Silver sits precisely at this interface," the expert added.

Why Silver, Why Now

Silver does not generate energy. It enables electricity to move through systems under extreme stress.

It is used in contacts, switches, connectors, conductive pastes, solders, photovoltaic cells, and power electronics — not as bulk material, but at critical failure points.

As electrical loads scale and reliability margins shrink, silver demand rises not because more silver is used everywhere, but because it is required precisely where systems cannot afford to fail.

Solar power illustrates the dynamic clearly. Even though silver intensity per solar cell has fallen roughly 95% since 2010, total solar silver consumption has quadrupled as deployment has overwhelmed efficiency gains. Solar scales by surface area, not device count. Utility-scale installations consume silver by the ton.

AI is now binding itself directly to that same energy supply chain. What makes the current silver move different from prior cycles is synchronization.

AI data centers. Grid hardening. Solar expansion. Electrified transport. Edge inference. Industrial automation. Defense modernization.

Each trend alone would be manageable. Together, they converge on the same physical bottlenecks.

Supply, meanwhile, cannot respond symmetrically.

Most silver production is a byproduct of mining other metals, making supply structurally price-inelastic. Recycling helps only at the margin. Substitution fails precisely where reliability requirements are highest.

This imbalance is not cyclical.

"This is not a temporary imbalance," Visser said. "It is structural."

A Signal, Not A Story

Exponential systems do not announce their bottlenecks in advance. They reveal them through stress, repricing, and the failure of substitution.

At the World Economic Forum in Davos, Nvidia CEO Jensen Huang described the coming AI-driven infrastructure expansion as an $85 trillion opportunity over the next 15 years.

That buildout will not be limited to chips or data centers. It will stress grids, power electronics and materials.

Silver's surge is not the story of AI. It is the signal.

"AI is not escaping the physical world," Visser said. "It is colliding with it."

And markets are already responding.

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