Investor's Guide to Silver

Key takeaways:

• Industry figures show ongoing silver supply deficit
• Analysts see scope for higher prices in 2025
• Silver has bright long-term future as energy transition picks up

Silver prices put in a stellar performance in 2024, reaching 12-year highs of over $34.50 an ounce in October, compared with just below $24.00 an ounce at the end of 2023 – a 44% gain at their peak. Even a significant pull-back to $29.00 an ounce in late December 2024 has left the precious metal up 21% from its price a year ago.

Looking ahead, 2025 is positioned as a pivotal year for silver, as the market heads into the new year after another annual structural supply deficit. Market participants are also weighing the relative impacts of further interest rate cuts, safe haven demand due to simmering conflicts around the world, surging industrial demand for the metal and investor interest in tangible assets as central banks reduce their dollar reserve holdings.

Supply and Demand Fundamentals Support Higher Prices

2024 was set to bring a fourth consecutive year of global supply deficit for silver, according to industry group, the Silver Institute. The organisation’s forecast for the end of 2024 shows a structural supply deficit of 182 million ounces. The figures show that total global supply of silver has barely changed at just over 1 billion ounces per year over the last 10 years.

Meanwhile, demand has increased from 958 million ounces in 2020 to 1.026 billion ounces in 2024, according to the group’s estimates. The figures show that the global supply of silver has failed to keep up with demand for four straight years.

Unless global supply surges dramatically in 2025, the market is on course to see a fifth consecutive annual net shortage of silver. And any silver production challenges in 2025 would only serve to exacerbate the metal’s bullish fundamentals this year.

Geopolitical and Economic Dynamics Create Uncertainty

Geopolitical risks came to the fore in 2024, with the ongoing war between Israel and militant groups in Gaza, Lebanon and Yemen, and Russia’s war with Ukraine continuing to heighten fears of a wider conflict. These regional flashpoints — which have raised investor demand for safe haven investments — remain a wildcard factor for silver in 2025.

The toppling of the regime of former Syrian President Bashar al-Assad in December 2024 and the involvement of Iran in supporting various militant groups, also contribute to the uncertainty around stability in the Middle East in 2025. Added to the mix is uncertainty over how the incoming administration of President Donald Trump will handle US foreign policy in respect of these regional conflict zones.

All of these elements create potentially supportive factors for silver, particularly if they contribute to driving gold prices to fresh highs. All things being equal, silver prices would be expected to rally again in response to a surge higher for gold.

Markets Eye Central Bank Monetary Policy

In addition, silver prices are likely to take support from further loosening of monetary policy by central banks in 2025, particularly by the US Federal Reserve. Expectations of further interest rate cuts have been somewhat dampened in late 2024, as the incoming Trump administration is expected to implement policies that are potentially inflationary, narrowing the US Fed’s scope to cut interest rates in 2025. Nevertheless, the markets are expecting further US interest rate cuts totalling up to 50 basis points in 2025, and this should act to support gold and silver prices as non-interest-bearing assets.

Industrial Demand Growth to Continue

Silver has been a valuable industrial metal for decades, and for good reason. Silver’s ability to conduct thermal and electrical energy and its antimicrobial properties make it a much sought-after metal in the production of a wide range of high-tech, industrial and medical products, with roughly 50% of silver demand worldwide coming from industrial applications. These include uses in areas as diverse as solder and brazing alloys, electrical circuits, semiconductors, touch screens, medical and dentistry equipment, nuclear reactors, aerospace, defence and water purification systems.

However, silver is also playing an expanding role in the accelerating global energy transition, which is centred on a switch from fossil fuels to unlimited supply of energy from renewable sources. This continues to create growth in demand for silver in batteries and industrial-grade energy storage, solar panels and electric vehicles, and high-power computer networks to support Artificial Intelligence (AI) systems, among other uses.

Silver Technical Analysis

Silver prices have pulled back in late 2024, and the bearish momentum has seen the price test successive downside support levels at around $30.00 an ounce in November and $28.75 an ounce in December. Should the losses continue, silver may find renewed support based on a declining trend line at $27.80 to $28.30 an ounce.

On the upside, silver may encounter oblique major resistance at $30.12 an ounce, followed by horizontal major resistance at $32.06 an ounce. If prices push up through these shorter-term resistance points, the price could re-test the 2024 highs of over $34.50 an ounce, followed by horizontal major resistance at $34.99 an ounce.

Analysts Expect Higher Silver Prices in 2025

Companies’ expectations for silver prices in 2025 generally reveal a potential to revisit and even exceed the highs seen in 2024.

US bank JP Morgan’s commodities team sees silver prices rising toward $38 an ounce by the end of 2025 – a move that it expects to see once base metals have found a bottom in early 2025.

Precious metals company Heraeus expects silver to trade in a range of $28 to $40 an ounce in 2025, noting that silver tends to outperform gold in the later stages of bull markets. The company highlights factors including expectations of lower US interest rates, a weaker US dollar, ongoing geopolitical risks, and a price for silver that is still undervalued relative to gold.

Meanwhile, global financial services company WisdomTree forecasts that silver prices will rise to $40 an ounce by the third quarter of 2025, taking support from strong industrial demand and decelerating supply of primary metals, of which silver is a byproduct.

In general, market observers have raised their silver price forecasts compared with predictions made in November 2024.

Investment Strategies for 2025

Professional and retail investors wishing to invest in silver in 2025 have a range of options including buying and selling physical silver, investing in silver-backed exchange-traded funds (ETFs), mining company stocks and silver-backed digital currencies.

Physical silver bullion offers a tangible asset with certainty of ownership but brings security risks and associated costs, including storage. Silver-backed ETFs are funds which track the price of silver, allowing investors to profit from price appreciation. They can be suitable for investors who wish to diversify their portfolios, which may contain various assets such as stocks, bonds, or cash. 

A further option is to invest in the companies mining physical silver. This is a way to gain exposure to silver which may be leveraged, as the share price appreciation can be proportionally larger than that of the metal itself.

A more innovative option is to invest in silver-backed digital currencies such as Kinesis silver (KAG), a digital asset that is fully backed by one ounce of silver – a real-world asset. Silver (KAG) aims to overcome the shortcomings of fiat currencies, which can lose their purchasing power due to inflation and government policies such as quantitative easing while offering a yield as well as the convenience of an easy-to-use currency.

To discover more about investing in gold and silver, read this article: Gold vs Silver as an Investment | Kinesis.

Risks and Challenges for Silver in 2025

After 2024’s surge, silver prices could face headwinds in 2025. First, silver’s performance tends to follow gold in a directional sense, so any significant fall in gold prices would be expected to limit silver’s upside potential and could trigger lower prices. Potential peace deals in some of the world’s conflict zones could also diminish investor interest in safe havens such as gold and silver.

Furthermore, any slowdown in industrial output in key developed economies could erode demand for silver in industrial applications, which represent roughly 50% of total demand for the metal. A case in point is China’s recent overproduction of solar panels, which could dent demand for silver as producers cut back on production or are faced with lower export demand as other countries put up trade barriers to stem the flood of cheap imports.

Bright Long-Term Outlook For Silver

Despite the aforementioned price risks, silver stands to benefit from a long-term global shift toward unlimited power from renewable energy, where silver plays a key role in solar panels, electrical circuits and energy storage.

In addition, the grey metal is set to see growth in demand from a host of industrial applications, through increased adoption of high-tech goods, electronic devices, AI-based computer networks, and many other applications across a broad range of economic sectors. These sources of industrial demand add to silver’s dual role as a precious metal, meaning it has wide appeal to those wishing to invest in a scarce and tangible asset and one increasingly needed across the industrial supply chain due to its unique physical properties.

Citations

Global Industrial Demand on Track for a New Record High in 2024. | The Silver Institute

Market Outlook 2025 | J.P. Morgan Research

Heraeus Precious Metals Precious Metals Forecast 2025

https://www.wisdomtree.eu/-/media/eu-media-files/other-documents/research/market-outlook/wisdomtree-silver-outlook-q3-2025.pdf?sc_lang=en-ie

Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.

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