The price of silver has reached approximately $40 per ounce, marking its highest point since 2011. The Silver Institute forecasts a continuing deficit in the silver market for the fifth year running in 2025.
As reported, there’s been a significant influx of capital into silver-backed exchange-traded funds (ETFs), which have seen growth for seven straight months as of August. This trend is reducing the available silver stockpile in London, contributing to a more robust market.
The Ishares Silver Trust (SLV) has outperformed this year, up about 37%, compared to the SPDR Gold Trust (GLD), which sits around 33%.
Several factors are likely to drive silver’s performance in 2025.
Often regarded as an industrial metal, around half of silver’s demand comes from industrial uses. The need for silver in industrial applications is escalating, particularly in green energy sectors. Industrial demand rose by 4% in 2024, as per the Silver Institute.
Silver’s role in solar and electric vehicle technologies is crucial. Thus, the expanding global solar PV industry and the increasing demand for sensors in the IoT space are both propelling silver’s need.
The surge in solar activity in China has also bolstered demand, with solar cell exports soaring over 70% in the first half of the year, largely due to strong shipments to India.
In the automotive sector, even though the production of battery electric vehicles is slowing down, the demand for silver is expected to rise. Factors include more refined vehicles and ongoing electrification of powertrains, along with continuous investments in necessary infrastructure.
The global rollout of 5G technology also bodes well for silver, given its essential role in electronic components that support the technology.
In September, the Federal Reserve may cut interest rates, especially after comments made by Chairman Jerome Powell during a highly awaited speech at Jackson Hole. Current indicators suggest a 99.4% probability of a rate cut in September. The softer labor market seems to have influenced this potential decision.
If the Fed moves toward easing policies, even gradually, it could have implications for the US dollar’s strength. Factors like lower tariffs proposed by President Trump and ongoing inflation trends could further impact the dollar.
Since silver prices tend to move in the opposite direction of the dollar, a decline in the dollar typically benefits gold prices as well. The Investco DB US Dollar Index Bull Fund has dipped 7.2% this year and has seen a slight decrease over the past month.
