Remember when everyone was obsessed with gold hitting new records? Yeah, well, silver quietly stole the show in 2025.
While the yellow metal grabbed headlines crossing $4,000, its poorer cousin surged more than 71% year-to-date and actually touched a nominal all-time high of $54.47 in October. That’s the kind of move that makes even seasoned commodity traders sit up and blink twice.
And here’s the crazy part – many believe we’re still in the early innings.
Why 2025 Became Silver’s Breakout Year
I’ve been following precious metals for over a decade, and I can’t remember the last time silver felt this… structural. Usually these spikes feel speculative. This one feels different.
The rally actually started looking inevitable around spring when something unusual happened: the gold-silver ratio blew out past 100. For context, that means you needed more than 100 ounces of silver to buy one ounce of gold – a level that historically screams “silver is cheap.”
Smart money started positioning. Then India entered its post-monsoon buying season right as Diwali approached. Then tariffs started getting thrown around. Then London vaults literally started running out of metal.
Suddenly, transporting silver by plane instead of ship became a real conversation. When that happens, you know something fundamental has shifted.
The Supply Side Is Broken (And Getting Worse)
Let’s start with the part most investors often overlook – silver is primarily a byproduct metal.
Roughly 70-80% of silver comes from mines that are actually chasing copper, lead, zinc, or gold. When those base metal prices are weak, or when mines in Peru and Mexico face strikes, permitting delays, or simply run out of high-grade ore, silver production takes an immediate hit.
And that’s exactly what’s been happening for the better part of a decade.
- Mine production has been declining since 2015
- Major producing regions in Central and South America have seen consistent closures
- Grade depletion is real – many older mines are simply running out of economic ore
- New silver mines? Almost none coming online in the scale needed
The result? The market flipped from surplus to deficit, and not in a small way.
“Over the past twelve months, the underlying surplus has turned into a structural deficit driven by electrification, artificial intelligence, and photovoltaics.”
– Commodity market analyst
Industrial Demand: The Silent Rocket Fuel
Everyone knows silver is used in jewelry and coins. What fewer appreciate is that industrial uses now consume more than half of annual supply – and that percentage keeps climbing.
Think about what we’re building right now as a society:
- Every electric vehicle uses 25-50 grams of silver today (some new designs with solid-state batteries could need a full kilo)
- Solar panels – silver paste is literally irreplaceable for conductivity
- 5G infrastructure and data centers (hello AI boom)
- Even medical devices and water purification systems
Unlike gold, which mostly gets hoarded in vaults, once silver goes into a solar panel or EV, it’s essentially gone forever. Recycling rates are decent but nowhere near enough to offset growing fabrication demand.
And here’s what really keeps me up at night – we’re at the very beginning of these megatrends, not the end.
India: The 800-Pound Gorilla Everyone Forgets
While Western investors obsess over ETF flows, India quietly consumes around 4,000 tonnes of silver annually – mostly for jewelry and gifts.
When harvest season ends and farmers have cash in hand, many still prefer physical precious metals over bank accounts. This year, with gold prices through the roof, silver became the affordable alternative.
Then Diwali hit. Then wedding season started. The result? Domestic Indian silver prices briefly hit the equivalent of $100+ per ounce while global prices were still in the $30s.
That’s not speculation. That’s cultural buying meeting structural supply shortage.
The London Vault Story Nobody Talks About
Perhaps the most telling signal came from London – traditional hub for global silver trading.
In 2022, LBMA vaults held over 31,000 tonnes. By early 2025? Down to about 22,000 tonnes. That’s roughly a third of the metal simply… gone. Mostly shipped to India and China.
At one point in October, lease rates – basically the cost to borrow physical silver – spiked to 200% annualized overnight. I’ve never seen anything like it outside the Hunt brothers era.
When borrowing metal costs that much, someone is very desperate to deliver, and someone else is very confident holding.
So Where Does Silver Go From Here?
Look, I’m not here to throw out $100 price targets like some YouTube prophets. But the setup is compelling.
We have declining mine supply meeting accelerating structural demand in sectors that literally cannot substitute silver. We have physical market tightness that’s forced extraordinary measures. We have the gold-silver ratio still elevated by historical standards.
The volatility that earned silver its “Devil’s metal” nickname hasn’t gone anywhere – we’ll see $5-10 moves like they’re nothing. But the trend? The trend feels higher.
In my experience, when physical markets disconnect this dramatically from paper markets, when vaults empty, when industrial users start forward-buying years in advance… price eventually catches up to reality.
Silver might cool off. It might consolidate. But the fundamental story that started in 2025? That’s not going away anytime soon.
The white metal spent decades in gold’s shadow. Maybe, just maybe, its time has finally come.
Note: This article contains forward-looking thoughts based on current market conditions. Commodity investing involves substantial risk and is not suitable for all investors.
