Silver Takes a Breather Following Historic Rally

After a breathtaking surge to unprecedented levels, the silver market is experiencing a period of consolidation. The white metal notched a fresh all-time high of $66.88 per ounce on Thursday, capping a remarkable rally that has seen its value soar by 130% since the start of the year—its strongest annual performance since 1979. As Friday’s trading brought a modest pullback to around $65, investors are seen locking in profits from the historic run.

The powerful upward move is fundamentally anchored in a persistent supply-demand imbalance. Analysts highlight that the global silver market is now in its fifth consecutive year of structural deficit. Projections for 2025 anticipate a shortfall of approximately 117 million ounces. This squeeze is driven by stagnant mine output, which remains steady at about 813 million ounces annually, while consumption from both industrial users and investors continues to break records.

Industrial demand is being supercharged by the solar power, electric vehicle, and data center sectors. On the investment side, exchange-traded funds (ETFs) have absorbed roughly 130 million ounces of silver this year alone. These dynamics are visibly depleting registered inventories across major exchanges in London, New York, and Shanghai. The metal’s recent classification as a critical mineral in the United States further underscores its strategic importance.

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Macroeconomic Winds Remain Favorable

The broader economic landscape continues to provide support. Recent U.S. inflation data revealed core price pressures rising at their slowest pace since early 2021, bolstering expectations for additional interest rate cuts from the Federal Reserve. Current market pricing suggests about a 25% probability of a rate reduction as soon as January. Furthermore, ongoing geopolitical tensions in regions like Venezuela and Ukraine are sustaining safe-haven demand for precious metals.

Outshining Gold

In 2025, silver has dramatically outperformed its more famous counterpart, gold. While gold has posted a respectable gain of around 64%, silver has nearly doubled that performance. This relative strength is reflected in the declining gold-to-silver ratio, which has touched multi-year lows. Silver’s extensive industrial applications grant it a structural demand advantage over gold, which is prized primarily as a store of value.

Looking ahead, market experts anticipate the supply deficit will persist into 2026. Some analysts see potential for prices to reach $75 per ounce, driven by the accelerating global transition to renewable energy and the expansion of artificial intelligence infrastructure. However, silver’s characteristic volatility remains a key feature of the market; historically, it tends to be two to two-and-a-half times more reactive to market movements than gold.