Silver and crude oil prices reverse, stemming from two structural changes in China

In the international commodities market in 2025, rising precious metals prices and falling oil prices are drawing attention. A symbolic development is that the price of silver per standard unit first exceeded the price of oil in 44 years since 1980. The historic “plot twist” reflects two structural shifts. These are China’s accelerating decarbonization trend and the long-term risk of domestic economic disinflation.

In mid-December, a report by renowned strategist Michael Hartnett of U.S. Bank of America Securities (BofA Securities) sparked heated discussion among market participants. The chart he focused on is the “ratio of oil and silver prices.” Calculated by dividing the price of 1 barrel of oil by the price of 1 ounce of silver, the ratio has been below 1 since December. Aside from the anomalies that appeared during the COVID-19 period, the distinct reversal in the prices of the two assets is the first since 1980.

On December 24, the London spot price—which is used as a benchmark for silver—inched up to $72 per ounce, setting a new all-time high. Compared with the end of 2024, it rose 2.5 times. Looking at oil, U.S. West Texas Intermediate (WTI) futures prices fell below $55 per barrel in mid-December, hitting the lowest point in about 4 years and 10 months. With a simple calculation, coins totaling around 31 grams of silver are enough to buy one barrel of oil.

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The Japan Economic News Company and the Financial Times merged into the same media group in November 2015. The alliance between two newspapers—both founded in the 19th century, in Japan and the UK—is moving forward with cooperation across a wide range of areas, such as joint special features, under the banner of “high-quality, the strongest economic journalism.” This time, as part of that effort, article exchanges are taking place between the two newspapers’ Chinese-language websites.