Silver prices have surged over 150% in 2025, breaching multi-year highs and crossing the $75 per ounce mark. Unlike typical safe-haven rallies driven by risk aversion, this move is being shaped by tangible physical market dynamics.
The underlying driver appears to be a persistent supply squeeze rather than speculative euphoria.
Multiple structural factors have come together in real time: consistent supply-demand deficits, falling global inventories, and resilient industrial demand across key sectors. These developments have created a visible imbalance in the physical market, even as benchmark prices try to catch up.
Supporting this trend are shrinking stockpiles across major vaults and exchanges, coupled with signs of tightening availability in key producing regions. This environment has pushed buyers, both institutional and industrial, towards acquiring physical silver, widening the disconnect between paper contracts and actual delivery.
Silver has been in a structural deficit for several years, with demand generally outstripping supply. According to industry reports, the global silver market is expected to remain in deficit in 2025, with projected shortfalls on the order of more than 100 million ounces.
This deficit is difficult to bridge quickly. Most silver is produced as a by-product of copper, zinc, and lead mining, which limits supply flexibility. Ore grades are also reportedly declining, and new mines typically take over a decade to become operational.
Meanwhile, inventories across COMEX, London vaults, and Shanghai have steadily declined over recent years, reinforcing concerns about tightening physical availability. Though exact figures vary, the drawdown in stocks is evident across all key storage hubs.
Silver continues to see strong industrial demand, especially in solar panel manufacturing, electric vehicles, electronics, and medical applications. Estimates suggest that 50–60% of silver demand now stems from industrial use.
Unlike gold, silver's role in industrial applications is non-substitutable in many cases, particularly in the renewable energy and electronics sectors. This adds a layer of fundamental support that has become increasingly important as green infrastructure spending rises globally.
Reports suggest that China may introduce silver export restrictions starting January 1, 2026, requiring companies to obtain government-issued licenses to ship the metal abroad. While details are awaited from official sources, the prospect of tighter outbound flows from one of the world's key players has added another layer of supply-side concern to the market.
According to Justin Khoo, Senior Market Analyst at VT Market, the rally in silver so far is not purely euphoric but grounded in both macro stress and structural demand.
He notes that concerns around fiscal sustainability, sticky inflation expectations, and real-asset demand have all supported silver’s move. Additionally, silver’s industrial exposure, particularly in energy transition and electronics, has created demand that gold lacks.
Khoo highlights that the sharp compression in the gold-silver ratio earlier in the year indicates a catch-up phase rather than speculative excess. However, he does note that silver’s higher beta means near-term corrections are likely, especially after a steep ascent. These should be viewed as consolidations unless fiscal or inflation risks recede significantly.
For 2026, Khoo expects silver to trade in a broad range of $48–70 per ounce, with potential extensions toward $75 if monetary easing accelerates or industrial demand strengthens sharply.