Silver Smashes $70: Is the "Forced Central Bank Buying" Thesis Playing Out?

XAG/USD | Commodities | Central Bank Reserves

Spot Silver (XAG/USD) has aggressively breached the psychological $70/oz barrier, trading as high as $72 this week. The surge validates a growing macro-thesis that silver is transitioning from a mere industrial metal to a critical monetary reserve asset.

The “No Choice” Buy

Clocktower Chief Strategist Kevin Wang has highlighted a structural shift driving this rally: the “Forced Buyer” hypothesis.

• Sovereign Debt Risks: With global debt exceeding $300 trillion and Western bond markets facing fiscal discipline questions, Central Banks are diversifying away from fiat-backed bonds.
• Gold is Crowded: With Gold (XAU/USD) already at inflation-adjusted highs, Central Banks seeking hard assets have limited alternatives. Platinum and Palladium markets are too thin to absorb sovereign-level capital flows.
• Silvers Role: This leaves Silver as the primary liquid alternative for de-dollarization flows.

Technical Drivers: The Gold-Silver Ratio

Market analysts note a critical technical breakdown in the Gold-Silver Ratio, which has fallen below a 15-year rising trend channel. Historically, this signal precedes a period of significant outperformance by Silver relative to Gold.

Furthermore, adjusted for inflation, Silver prices are only just breaking out of long-term downtrends, suggesting substantial catch-up potential compared to Gold's mature bull market. If the Federal Reserve is perceived to fall “behind the curve” on inflation in 2026, real rates could dip further, adding rocket fuel to the metal's ascent.