Scale and Significance of the Surge
- Silver prices rose ~160% in 2025, outperforming gold.
- Prices crossed ₹2.4 lakh/kg by end-2025.
- Indicates a structural, not speculative-only, commodity rally.
Relevance
- GS-3 | Economy
- Commodity markets, inflation hedging, financialisation
- Gold–silver dynamics, impact of global monetary policy
Dual Nature of Silver: Investment + Industrial Metal
- Unlike gold (primarily a store of value), silver has:
- High industrial utility.
- Strong linkage with future technologies.
- Key demand sectors:
- Solar photovoltaics.
- Electric vehicles.
- Batteries and electronics.
- AI hardware and data centres.
Industrial Demand Boom
- Energy transition accelerated demand:
- Solar panels use silver paste.
- EVs require silver-intensive circuitry.
- AI-led digital expansion:
- Data centres, servers, chips increased silver consumption.
- Result:
- Silver demand grew faster than supply elasticity.
Supply-Side Constraints
- Silver production largely by-product mining (from zinc, copper).
- Constraints:
- Long gestation period for new mines.
- Environmental regulations.
- Declining ore grades.
- USGS additions to “critical minerals” list increased scrutiny but not short-term supply.
Global Supply Mismatches
- London silver shortage (Oct 2025):
- Physical availability tightened.
- Spot prices spiked sharply.
- Structural mismatch between:
- Physical silver demand.
- Paper silver instruments.
Financialisation & Investment Demand
- Rising gold prices spilled over into silver.
- Drivers:
- Inflation hedging.
- Currency depreciation fears.
- Safe-haven diversification.
- ETFs and mutual funds:
- Sharp inflows earlier in 2025.
- Some moderation later, but momentum sustained.
US–China & Geopolitical Factors
- Trade tensions disrupted metal supply chains.
- Tariffs and export controls:
- Raised costs.
- Encouraged stockpiling.
- Silver benefited as a strategic metal in clean-tech rivalry.
Comparison with Gold
- Gold:
- Safer, slower, policy-driven.
- Silver:
- More volatile.
- More sensitive to industrial cycles.
- Hence:
- Silver outperformed gold during tech- and energy-driven growth.
