The silver market is experiencing exceptional growth in 2025; yet, it faces a structural imbalance. While the silver price hit a new all-time high in October and gained approximately 67% from the beginning of the year until November 6, the market remains in a significant supply deficit despite declining demand.
According to current figures from Metals Focus, presented at the annual Silver Industry Dinner of the Silver Institute in New York, the silver market is thus heading towards its fifth consecutive supply deficit. This development is driven by a combination of geopolitical tensions, US trade policy, concerns about national debt, and the US government’s classification of silver as a “critical raw material”. This has noticeably strengthened silver’s status as an investment and diversification metal in many portfolios.
Institutional Investors are Increasingly Viewing Silver as a Standalone Asset Class
On October 17, the silver price reached a new record high of 54.48 US dollars per troy ounce. Although profit-taking followed, the price largely remained above 47 US dollars – an indication of the current market environment’s robustness. Since the beginning of the year, silver has thus outperformed not only the gold price, which rose by approximately 52% during the same period, but also the US stock index S&P 500, which gained around 14%.
Another important indicator: the gold-silver ratio. After this ratio was still above 107 in April, it fell to approximately 78 by October – the lowest level since July 2024. A declining ratio means that silver gains relative strength against gold. Metals Focus interprets this as an indication that institutional investors are increasingly perceiving silver as a standalone asset class.
In parallel, silver-backed Exchange Traded Products (ETPs) recorded a significant inflow. Holdings increased by approximately 18% by November 6, which corresponds to a net increase of about 187 million ounces. A large portion of these ETP holdings is located in London, which likely contributed significantly to the observed liquidity shortage in October.
Demand Declines – Silver Market Still in Deficit
Despite strong price development and high investor demand, the traditional demand sectors in the silver market show a different picture. Overall, global silver demand in 2025 is projected by Metals Focus to decrease by approximately 4% to around 1.12 billion ounces. All major segments – industry, jewelry, silverware, bars, and coins – are therefore expected to record declines.
In the industrial sector, traditionally the largest demand block, a decline of approximately 2% to 665 million ounces is expected. Here, uncertainties due to trade conflicts, tariffs, and geopolitical tensions are taking their toll. Additionally, there is increased “thrifting,” meaning manufacturers’ attempts to reduce the silver content in products given the high prices.
This trend is particularly visible in the photovoltaic sector. While newly installed global PV capacities are expected to reach a record level again in 2025, the silver requirement per module has continued to decrease. In total, it is therefore expected that the PV industry will require approximately 5% less silver than in the previous year.
This is partially offset by growth areas such as the equipping of data centers for Artificial Intelligence, as well as continuously increasing sales of electric vehicles – though no longer as dynamic as assumed a few years ago.
Jewelry, Silverware, and Investment Demand under Pressure
In the jewelry and silverware segment, a weakened demand is also evident in 2025. According to the presented data, consumption for silver jewelry will decrease by approximately 4%, while the silverware sector (existing products, gift items, etc.) is likely to show a decline of around 11%.
A significant factor here is the Indian market, which plays a key role in both categories. In India, the silver price, calculated in rupees, has been at record levels for some time – significantly earlier than the international silver price reached comparable highs. This dampens overall buying sentiment, although silver is traditionally firmly embedded in the local jewelry and gift culture.
Physical investment demand in the form of bars and coins for 2025 is estimated at approximately 182 million ounces. This would be the lowest level in seven years and represents a decline of around 4% compared to 2024. Here, strong sales and profit-taking by private investors in the USA are contrasted with robust demand behavior in other markets.
In India, for example, investors continue to buy, according to Metals Focus, despite high local prices – expecting that price levels could tend to be higher rather than lower over the course of 2025. In Germany and Australia, too, demand for physical silver investments remains relatively stable to slightly increasing.
Supply, Recycling, and Structural Deficit in the Silver Market
On the supply side, the situation in the silver market is less dynamic. Global mine production for 2025 is estimated at 813 million ounces, virtually unchanged from the previous year. Higher production volumes from Mexico and Russia are expected to offset declining production in Peru and Indonesia.
The share of primary silver mines in total production is estimated at approximately 227 million ounces, which represents a slight increase compared to the previous year and accounts for about 28% of global output. Mexico remains the most important producer: an increase to approximately 186 million ounces is expected there. Reasons include the recommissioning of the Tizapa mine after a prolonged labor dispute, the start-up of Endeavour Silver’s Terronera project, and higher contributions from Southern Copper.
The industry’s average All-in Sustaining Costs (AISC) in the first half of 2025 were around 13 US dollars per ounce, and thus approximately 9% below the previous year’s figure – despite increased levies and taxes. At the same time, the higher silver price ensured that margins were significantly expanded compared to historical levels.
On the secondary side, a slight increase in recycling is expected. Overall, the volume of recycled silver is projected to increase by approximately 1%, thus reaching its highest level in 13 years. Especially in Western markets, silverware is increasingly being melted down, while the volume of industrial recycling scrap is rather subdued.
In the overall balance, a clear supply shortage is nevertheless emerging for 2025: Metals Focus anticipates a market deficit of approximately 95 million ounces of silver. Thus, the silver market continues the chapter of structural undersupply – with deficits totaling almost 820 million ounces since 2021.
For market observers, this development provides an explanation for the recent price spikes and the temporarily strained liquidity, for example, at the CME, in whose warehouses record-high quantities of silver were delivered due to customs and trade issues.
