This unusual phenomenon comes at a time when silver is witnessing one of its strongest rallies in decades, while oil prices remain under continued pressure due to the global supply-demand imbalance.The relationship between silver and oil, which historically favored oil, has now reversed, with silver currently priced over $6 higher than a barrel of WTI crude.
According to data from Macrotrends, this is the largest difference in the ratio since 1979.
Silver run and market performance
Silver prices are up more than 150% this year, making 2025 the metal’s best annual run since 1979. On December 16, silver was trading in a range between $62.12 and $64.21, having briefly reached a high of $64.64 earlier this week before posting any gains.
Since the start of 2020, silver has risen more than 220%, which is in stark contrast to oil’s decline of almost 44% over the same period.
The current rally has seen silver outpace the price of oil, a reversal from mid-2022 when WTI crude was trading at nearly $95 per barrel and silver was hovering around $20, giving oil a relative advantage of more than 4.5x.
The reversal began to unfold earlier in 2025, when silver surpassed $54.48 per ounce for the first time, while oil traded between $65 and $75 per barrel.
Why is the price of crude oil falling?
While silver has recovered, oil has faced persistent headwinds. WTI oil has fallen 18% so far in 2025, making it the weakest year since the pandemic-induced collapse of 2020. The decline can be attributed to weak demand in key consumption regions such as Europe and China, high inventories and the limited impact of production cuts by OPEC+ countries.
Despite geopolitical tensions and energy market disruptions, oil is struggling to hold on.
The current price inversion is rare and reflects changing macroeconomic dynamics, with silver benefiting from both industrial demand and safe haven interest. This may be one of the few times in history that a precious-industrial hybrid metal has traded above the world’s most important energy benchmark.
Rajkumar Subramanian, Head of Product & Family Office, PL Wealth, said silver is increasingly behaving as a lever for both global growth and the energy transition. He noted that its dual identity – as a monetary and industrial metal – makes it responsive to shifts in interest rates, currency strength and manufacturing trends.
In the Indian context, Subramanian noted that silver is no longer seen merely as a tactical trade. With increasing retail participation through ETFs and digital platforms, and rising industrial use, silver is emerging as a diversifier for portfolios. He added that India’s push for clean energy and manufacturing is structurally increasing demand for silver.
What’s Driving the Silver Wave?
Silver’s rally is driven by a combination of industrial demand, speculative buying and macroeconomic factors.
Industrial use is responsible for almost 70% of global silver consumption, with major applications in solar panels, electric vehicles and electronics. Increasing global solar installations and broader adoption of clean technologies are contributing to long-term demand for silver.
The increased interest from investors also plays a role. Hedge funds and institutions have increased their exposure to silver as a hedge against inflation and currency devaluation. Speculative short squeezes have contributed to the rally, as have expectations of rate cuts by the US Federal Reserve and limited mining production in recent years.
What awaits us?
The oil markets, on the other hand, remain under pressure. Moreover, OPEC policies and geopolitical risks have done little to lift prices amid persistent oversupply. As energy transitions accelerate globally, especially in BRICS economies and developed markets, the structural demand outlook for oil remains problematic.
The price difference between the two raw materials has increased sharply in recent months. As of mid-2022, when oil was almost five times more expensive than silver, the spread between silver and oil has now increased to over $6 in favor of silver.
Renisha Chainani, head of research at Augmont, estimates the support level for international silver at $60.5/oz and resistance at almost $65/oz. She notes, “For silver, $65 (~Rs 200,000) will be a tough nut to crack. Prices are expected to touch a support at Rs $60.50 (~Rs 188,000) before rising to resistance.”
Axis Securities, meanwhile, maintains a positive bias as long as the $50 level remains as support. Their comment suggests that any price correction could serve as an accumulation opportunity, provided the structural trend remains intact.
“Silver has decisively broken out of a decade-long low structure. A sustained monthly close above $67 could trigger a multi-year uptrend targeting $76-$80. Consolidation may occur near resistance around $65, but the overall structure remains strongly bullish over the long term,” the report said.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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