Silver, long known for its volatility and often referred to as the “Devil’s metal,” has become one of 2025’s standout performers. Prices surged to a record $54.47 per ounce in mid-October, marking a 71% year-on-year gain, outpacing gold’s 54% increase. Despite some recent pullbacks, silver has resumed its upward trend as supply shortages deepen and demand accelerates from both investors and industry.
Analysts say this year’s rally differs from past cycles because it reflects structural shortages, rising industrial consumption, and a sharp rebound in demand from India, the world’s largest silver consumer. With mine production declining for a decade and major vaults running low, many market participants believe silver’s strength is far from over.
Why Supply Is Tightening Faster Than Expected
A crucial driver behind the 2025 surge is the sustained decline in global mine output. According to industry estimates, production has been slipping for ten years due to mine closures, resource depletion, and infrastructure challenges, particularly in Central and South America. The supply shortfall has now reached a point where inventories are being drawn down at a rapid pace.
London’s silver vaults – historically one of the world’s key supply hubs – illustrate the shift. Holdings fell from 31,023 metric tons in mid-2022 to about 22,126 metric tons by early 2025, a drop of roughly one-third. By this autumn, analysts reported that “there was no available metal left in London,” pushing borrowing costs for traders to extreme levels. At one point, overnight silver lease rates soared to 200% annualized, underscoring the tightness of available supply.
Physical shortages intensified further as India entered its seasonal buying period following the monsoon and ahead of Diwali. Silver remains an affordable store of value for millions of rural households, and demand surged so sharply that domestic prices in India hit a record 170,415 rupees per kilogram, up 85% since January.
Adding pressure, around 80% of India’s silver is imported, with supply from the UAE, China, and the U.K. struggling to keep pace as inventories thin.
Industrial Demand and What It Means for Future Prices
Although overall industrial silver consumption is expected to dip slightly in 2025, demand remains robust across key growth sectors, including electric vehicles, AI components, and solar photovoltaics. Each EV currently uses about 25–50 grams of silver, but experts warn that next-generation solid-state silver batteries could push usage to 1 kilogram per vehicle, dramatically reshaping demand trajectories.
Silver also holds unique properties – the highest electrical and thermal conductivity of any metal – making it increasingly indispensable in high-performance electronics and renewable technologies.
Analysts say this combination of precious-metal appeal and industrial necessity is reshaping silver’s role in global markets. With underlying deficits forming and inventories shrinking, prices may stay elevated longer than in previous cycles and could continue climbing if industrial adoption accelerates.
