Silver, often called the ‘Devil’s metal’ for its extreme volatility, surged to fresh record highs this year — and analysts say the rally isn’t over, even as the market faces an acute supply squeeze. The metal has tracked gold’s explosive rise in 2025, with gold breaking above $4,000 an ounce and helping fuel broader interest in precious assets.
Silver prices hit an all-time high of $54.47 per troy ounce in mid-October, a 71% year-on-year jump. Although prices briefly cooled, momentum has returned despite historically tight supply conditions.
“Some people were having to transport silver by plane rather than on cargo ships to meet delivery demand,” Paul Syms, head of EMEA ETF fixed income and commodity product management at Invesco, told CNBC. He added that while some of the earlier spike has corrected, a fundamentally different backdrop is emerging — one that could keep silver elevated for much longer.
Historical peaks and a rare supply squeeze
October marked only the third major silver price peak in the past half-century. Previous spikes include January 1980, when the Hunt brothers notoriously tried to corner the market, and 2011, when fears around the U.S. debt ceiling drove investors toward safe-haven metals. “Silver is only about a tenth the size of the gold market, and that short squeeze caught several investors by surprise,” Syms said.
Unlike earlier rallies led primarily by investment flows, 2025’s breakout reflects an unusual mix of low supply, strong industrial demand, investor buying in India, and trade distortions driven by tariffs. After Liberation Day, gold prices surged while silver initially softened – sending the gold-silver ratio above 100, a level that historically signals silver is undervalued. The ratio later reached a record high in April.
“Risk managers didn’t want metal leaving the U.S. only to return 35% more expensive,” said Rhona O’Connell, head of market analysis EMEA and Asia at StoneX.
India’s seasonal demand fuels autumn surge
By early autumn, silver demand accelerated sharply as India’s monsoon and harvest seasons ended. “Farmers don’t really like the banks very much, so gold – and more recently silver – are their first choice after the harvest,” O’Connell explained. India remains the world’s largest silver consumer, using roughly 4,000 metric tons annually, mostly in jewelry, utensils, and traditional ornaments.
This year’s rally also coincided with Diwali, the country’s biggest holiday, further boosting seasonal buying. On Oct. 17, Indian silver prices hit a record 170,415 rupees per kilogram, marking an 85% increase since January. But the country imports around 80% of its silver – and that dependence is becoming an issue.
London vaults run dry
Although India sources supply from the UAE and China, the U.K. remains its traditional supplier. But London’s silver reserves have been declining for years.
LBMA data shows inventories fell from 31,023 metric tons in June 2022 to just 22,126 metric tons by March 2025 – the lowest level in years. “People don’t always see what’s happening in the vaults,” said O’Connell. “We reached a point where there was essentially no available metal left in London.”
The shortage pushed lease rates dramatically higher. “At one stage, overnight borrowing costs hit an annualized 200%,” O’Connell noted. “A lot of traders were very stressed, to put it mildly.”
Structural deficits deepen
Silver supply challenges aren’t new, but they’ve intensified. The Silver Institute’s 2025 World Silver Survey shows falling mine output over the past decade, particularly across Central and South America. O’Connell said the market has shifted from surplus to deficit due to three accelerating forces: EV electrification, artificial intelligence, and photovoltaics.
“At the moment, a standard EV needs about 25 grams of silver, with larger models using around 50 grams,” Syms explained. “If we transition to solid-state silver batteries, each vehicle might require a kilo or more.” Silver’s high thermal and electrical conductivity makes it essential across sectors including EVs, AI hardware, and renewable energy.
Silver’s dual identity supports long-term growth
“Silver crosses the bridge between precious and industrial metals,” Syms said. “With advances in technology, batteries, and solar power, its use cases only expand as we move toward a more electrified world.” With tightening supply, rising industrial demand, and renewed investor interest, analysts say the ‘Devil’s metal’ may continue to shine well beyond 2025.
