Why did silver rise so much in 2025?
Structural supply shortage
The latest report from the Silver Institute shows that silver supply remains tight, while the market has been experiencing shortages for years. In 2024, the deficit was around 149 Moz, and a new deficit is expected in 2025 as industrial demand reaches new highs. Supplies at key hubs have been thinned, with several reports pointing to low inventories in China and tight conditions in London after the autumn squeeze.
Macro tailwind
Markets are pricing in further US rate easing, which generally weakens the dollar and lowers the opportunity cost of holding non-yielding assets like silver; that background played a central role in the breakout to $60.
Demand for industry and investment
Silver’s dual identity was more important than usual: ETF inflows soared, while industrial demand such as solar, electronics, EVs, and data center hardware kept the physical market tight.
Global supply and demand
According to the 2025 World Silver Survey, industrial manufacturing set records, led by solar photovoltaics and electronics. Mining supply remains stubbornly inelastic because 70-80% of silver is produced as a byproduct of base metal mining. Recycling increased, but not enough to close the gap, and survey data points to continued shortages into 2025.
Geopolitics and the Gold Wave: Spillovers to Silver
Gold’s explosive rally exerted a “pull” on silver, pushing the gold-silver ratio off extreme highs and drawing relative value seekers to the white metal. Geopolitical risks – from wars to tariff frictions – drove investors to keep assets in safe havens. Silver benefited both as a monetary hedge and as a crucial input into the clean energy and technology supply chain.
US tariffs and the US dollar
The 2025 tariff regime increased the average effective U.S. tariff to double digits and disrupted supply chains, leading to a weaker U.S. dollar and higher commodity prices. These conditions have historically supported dollar-denominated commodities such as silver. Although silver was not a direct target in the tariff war, reciprocal tariffs from other countries have diverted industrial supply chains, indirectly tightening the silver balance. In short, tariff-induced frictions and a softer dollar reinforced the bullish situation rather than undermined it.
India’s domestic demand supports silver
India has suffered a major demand shock. Voices and industry data pointed to rising imports and strong physical premiums, even at record rupee prices, due to high demand. As solar capacity targets and electronics production expansion have increased, industrial demand for silver has increased significantly. Moreover, tight local supply and rising festive seasonal buying pushed key MCX futures prices above Rs 200, 300 per kg this week.
Volatility, speculation and price outlook
The silver market is small and highly leveraged, so positioning swings can be sharp. High ETF inflows, supply stress at the COMEX, and low liquidity have pushed silver above $60, but there are potential triggers for air pockets if sentiment turns. Is a major correction possible? Yes, silver’s history shows that a 20 to 30% pullback is normal within secular uptrends, especially after vertical moves. A stronger dollar, fewer Fed cuts than expected, or a lull in PV/EV demand could lead to a price correction in the coming months.
However, the institutional outlook suggests that after a strong rally in 2025, precious metals may enter a consolidation phase in early 2026 before resuming their upward trajectory. Gold is expected to lead this trend, followed closely by silver. Structural supply shortages and strong industrial and investment demand indicate that the long-term outlook remains optimistic, even if short-term slowdown remains a risk.
(The author is Head of Commodity Research, Geojit Investments)
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