Silver has exceeded the USD 50 per fine ounce mark again – and is receiving additional tailwind from its inclusion in the USGS list of critical minerals for 2025. While silver is traditionally considered a precious and monetary metal, more than 60% of demand now comes from industrial applications. Analysts expect the new classification to further highlight the already tight supply situation.
Silver: Industry Drives Demand – Deficits Deplete Inventories
The structural shortage is at the center of the current market debate: According to industry observers, the silver market has had significant supply deficits for five years. The consequences are declining above-ground stocks and a greater sensitivity to demand peaks from electronics, medical technology and, above all, photovoltaics. The classification by the US Geological Survey (USGS) underlines this importance – it signals the need for political action along the supply chain, from extraction to processing and recycling.
Even if silver remains a monetary hedge, the price dynamics are increasingly driven by industrial tailwinds. This shifts the price drivers: In addition to interest rates and exchange rates, production cycles, investment programs in energy technology and government industrial policy are gaining in importance.
Customs Risks, Warehouse Flows and Futures Market: a Fragile Structure
The market environment remains volatile. In recent months, customs and trade issues have affected flows and warehousing. At the beginning of the year, significant amounts of silver flowed into New York vaults as market participants and bullion banks built up inventories as a precaution. At the same time, the available physical quantity in London decreased – reinforced by strong purchases from India.
The shortage in London was reflected in extraordinarily high leasing rates, which recently rose to over 34%. This was accompanied by backwardation on the futures market: spot prices rose faster than futures, a pattern that typically signals physical tightness. Even if silver has not yet been directly subject to tariffs, its classification as a critical commodity increases the attention paid to potential trade policy measures.
Voices from the Market: Higher Volatility, Deficits Remain an Issue
In a conversation with Kitco News, Matthew Piggott (Metals Focus) assesses the new USGS classification as a potential amplifier of existing tensions. His assessment: silver is likely to remain more volatile in the short term as long as the supply problems are not resolved. He expects another deficit for the current year; also in the coming year, as a significant weakening of industrial demand is not to be expected, no relief is to be expected. How the balance could shift back towards surplus depends heavily on the price level – the higher the price, the greater the incentives for substitution and thrifting (material savings).
This view is consistent with recent market mechanics: Physical tightness meets partial “front-running” of potential regulatory impulses. For investors and customers, this means an environment in which silver prices react more strongly to news on supply chains, inventories and mining projects.
Solar in Focus: Thrifting, Possible Substitution – and Looking Ahead
A central demand block remains the solar industry. According to estimates, silver accounts for about 15% of module costs – every price premium of USD 10 per ounce increases the pressure on manufacturers to reduce the silver content per cell. Piggott expects higher prices to accelerate thrifting trends. In the longer term, substitution by copper is also being discussed; however, this technology is still young on an industrial scale and has not yet been tested across the board.
This leaves the outlook divided: In the short to medium term, silver prices can remain high due to structural tightness, political classifications and industrial demand; at the same time, the industry is working on material efficiency and alternative designs. How strongly these innovations dampen demand depends on the pace of technological development.
In addition to silver, other metals were newly added to the USGS list – including copper, metallurgical coal, potash, rhenium, silicon and lead. For the silver market, this means: The metal is officially moving into the category of strategic raw materials, with potential impacts on investments, permits and trade.
Conclusion: The return of silver above USD 50 per fine ounce coincides with a political re-evaluation as a critical mineral. Bottlenecks, high leasing rates and futures market signals point to a tight supply, while industrial drivers – above all photovoltaics – are keeping demand high. At the same time, the combination of thrifting and possible substitution should help determine the balance in the medium term.
