Silver continues its upward trend, having firmly established itself above the $48 per ounce mark since summer. Year-to-date, this represents an increase of approximately 67%. Meanwhile, gold is approaching the $4,000 per ounce mark, up about 50% since the beginning of the year. This development is accompanied by a declining gold/silver ratio, currently around 81, which is below the five-year average – a sign that
Silver’s Momentum – yet its Relationship to Gold Sends Signals
The dynamics in the precious metals market are currently significantly influenced by silver. The white metal benefits both from the investment side – for instance, through
Nevertheless, market observers point to potential limiting factors. The British analysis firm Metals Focus, for instance, anticipates that persistently high prices could lead companies to reduce silver usage in industrial applications (“thrifting”). This process is not new in resource-intensive industries: During periods of elevated prices, materials are utilized more efficiently, substituted, or technologies are adapted to mitigate costs. For investors, this implies that, alongside price trends, industrial volume flows are gaining increased attention.
Solar Industry as a Barometer for Silver Demand
Photovoltaics (PV), one of the largest sources of silver demand, is being particularly closely observed. The metal is an essential component in PV conductive pastes, which ensure the electrical conductivity of the cells. According to the World Silver Survey, published by the Silver Institute and compiled by Metals Focus, the solar sector is projected to consume approximately 195.7 million ounces of silver this year – a slight decrease of about 1% compared to the record year 2024.
Metals Focus highlights that PV manufacturers had already been gradually reducing silver usage per watt even before the recent price rally. The increase in prices has further accelerated this trend and intensified the search for “breakthrough strategies” for cost reduction. Technological advancements – such as altered cell architectures, improved paste formulations, or potential substitutions – could reduce silver demand per watt by approximately 15–20% in 2025. While complete replacement solutions are also being discussed, they are not yet established on an industrial scale.
Concurrently, the sector continues its growth trajectory. In the first half of 2025, approximately 82% of the newly added electricity generation capacity in the USA came from solar energy and energy storage. From an industry perspective, this creates a dynamic tension: while consumption per unit decreases, the total output of installed systems expands the overall demand base for silver.
Supply Deficit Remains the Dominant Theme
Despite potential industrial adjustments, Metals Focus views the overarching market trend as intact. The structural imbalance between supply and demand is deemed crucial. For the current year, a deficit of approximately 187.6 million ounces is projected – marking the third-largest shortfall in recorded statistics. In a discussion last month, Philip Newman, Managing Director at Metals Focus, emphasized that industrial demand would need to decrease noticeably to substantially mitigate this deficit.
Metals Focus anticipates that investment demand will continue to grow in an environment of rising prices, potentially leading to prolonged deficits for silver. While higher prices typically induce thrifting effects, no fundamental collapse has emerged thus far that would significantly alter the overall outlook. Furthermore, short-term volatility – stemming from news in the solar industry, macroeconomic data, or US dollar movements – does not negate the fact that physical scarcity remains a primary price driver.
Consequently, a multi-faceted scenario for silver unfolds for the coming months. On the demand side, two opposing forces are evident: Firstly, the expanding role of industrial applications – encompassing electronics, e-mobility, and medical technology, alongside photovoltaics – and secondly, efficiency improvements that reduce material input per unit. The extent to which this “saving per gram” curtails overall consumption hinges on the pace of technological shifts and the speed of global solar and storage facility expansion.
On the supply side, the question persists regarding the extent to which mine production, recycling streams, and the project pipeline respond to price incentives. Historically, new capacities necessitate lead times, while recycling volumes are contingent on price levels, as well as collection and processing rates. As long as the structural deficit endures, the market remains sensitive to news that even marginally alters the balance.
For market participants, this implies that silver remains not only a classic precious metal investment but also an industrial material whose price development is significantly influenced by real economic trends. The current rally towards $50 per ounce highlights this dual role. The sustainability of the upward trend will likely hinge on three factors: the actual pace of thrifting in key industries, the global expansion of solar and storage projects, and the evolution of supply – particularly concerning the projected deficit.
Irrespective of any short-term pullbacks, the combination of photovoltaics as a structural demand driver, potential efficiency gains, and a tight market environment ensures that silver remains a focal point in the second half of 2025. For observers of the commodities sector, it will be crucial to monitor not only price benchmarks but also the key metrics behind the headlines: consumption per watt, new installations in the energy sector, recycling rates, and the evolution of the
