Silver's meteoric rise in 2025 has everyone talking. But what's driving this 'Devil's metal' to record highs, and does it have further to run?
Silver, often dubbed the 'Devil's metal' due to its volatility, has experienced a remarkable surge this year, reaching unprecedented levels. Experts suggest this is just the beginning, despite a noticeable supply crunch. This surge has mirrored the impressive rally of gold, which soared past $4,000 an ounce this year.
Silver's ascent saw it peak at $54.47 per troy ounce in mid-October, a staggering 71% increase year-on-year. While prices have slightly retreated since, the upward trend persists, even with limited supply.
"Some were resorting to air transport instead of cargo ships to meet delivery demands," explained Paul Syms, head of EMEA ETF Fixed Income and commodity product management at Invesco. He adds, "Longer-term, there's a different dynamic this time that could keep silver at reasonably high prices and maybe continuing to go up for some time to come."
This peak in October marked only the third time in the past 50 years that silver prices have reached such heights. Previous spikes occurred in January 1980, when the Hunt brothers attempted to corner the market, and in 2011, during the U.S. debt ceiling crisis when silver, like gold, was seen as a safe haven.
"Silver is only about a tenth the size of the gold market, and that short squeeze, obviously, sort of caught a few investors by surprise," Syms noted. Unlike past investment waves, silver's 2025 boom was fueled by a combination of low supply and high demand from India, alongside industrial needs and tariffs.
"After Liberation Day, the gold price spiked, but silver actually went down a little bit. And the gold-silver ratio spiked to above 100," Syms observed, referring to the gold-silver ratio, which indicates how many ounces of silver are needed to buy one ounce of gold. A low ratio suggests gold is relatively cheap, while a high ratio implies silver is undervalued and likely to rise. In April, this ratio hit a historic high.
"The risk managers in financial and industrial entities did not want to let any metal go out of the States for fear that it might come back in at 35% higher for example," said Rhona O'Connell, head of market analysis EMEA and Asia at Stone X.
As autumn arrived, silver experienced peak demand, particularly as India's monsoon and harvest seasons concluded. "Farmers don't really like the banks very much, so gold and latterly, silver, tend to be the first port of call when they've got the harvest in," O'Connell explained.
India is also the world's largest consumer of silver, using approximately 4,000 metric tons annually, primarily for jewelry, utensils, and ornaments. This surge in silver's appeal coincided with Diwali, the 'Festival of Lights,' India's biggest public holiday.
The Supply Crunch: A Key Factor
While gold is traditionally favored, silver, an accessible investment option in a country where about 55% of the population depends on agriculture, has outshone other metals this year. On October 17, the price of silver in India skyrocketed to a record high of 170,415 rupees per kilogram, an 85% increase since the year's start.
However, 80% of India's silver supply is imported. The UAE and China are increasing their support for this demand, but the U.K. remains a key supplier. Yet, London's vaults have been rapidly depleting. From holding 31,023 metric tons of silver in June 2022, the London Bullion Market Association's holdings dropped to 22,126 metric tons by March 2025 – the lowest in years.
"What isn't necessarily so visible to people is what's happening in the vaults," said O'Connell. "And that had reached a point where there was basically there was no available metal left in London."
In October, the squeeze was so intense that traders faced significantly higher borrowing costs, or lease rates, to maintain their positions. "At one stage, to borrow overnight was costing 200% on an annualized basis, so a lot of people were very stressed to put it mildly," O'Connell stated.
Supply remains a persistent issue for silver. The Silver Institute's 2025 World Silver Survey indicates that mine production has been declining over the past decade, especially in Central and South America. "Over the course of the past twelve months or so, the underlying surplus has started to turn into a deficit for three reasons: the impact of the electrification of the vehicle fleet, artificial intelligence, and photovoltaics," O'Connell explained.
The Future of Silver: Electrification and Beyond
"At the moment, a standard electric vehicle has about 25 grams of silver, maybe the larger EVs have 50 grams of silver as part of their components," said Syms. "If we move into these solid-state silver batteries, each electric vehicle might require a kilo or more of silver," he added.
With silver's high thermal and electrical conductivity, coupled with the rising demand from EVs, AI, and renewables, its value is poised to continue its upward trajectory. "Silver crosses over that bridge between precious and industrial metals, and the way technology is going on, the batteries, the solar panels, it's got some great use cases as we move into a more electrified world," Syms concluded.
But here's where it gets controversial... Could the current surge be a bubble, or is silver truly entering a new era? What are your thoughts on silver as an investment? Share your opinions in the comments below!
