Silver has experienced a remarkable rise. In 2025, its price doubled from around $30 an ounce at the beginning of the year to a record high of over $67 an ounce on December 18.
The metal was trading on the COMEX metal futures exchange for around $30 in January, and during the summer its price fluctuated between $37 and $40 before recording a serious increase in September. It has since continued to rise in price, with this trend intensifying especially in the last three months of the year.
The increase of over 110% since the beginning of the year represents a dramatic turnaround for the precious metal, long considered gold's poorer cousin. While some investors expect a quick correction in prices, silver's outlook remains bullish for next year.
The breakout was fueled in part by a weaker U.S. dollar and expectations that the U.S. Federal Reserve will cut interest rates. All of this makes precious metals more attractive as safe-haven assets.
But other factors have also contributed to silver's two-fold increase in value this year.
What challenges does silver production face?
Latin America, which produces more than half of the world's silver, is facing declining production as mines age and inventories dwindle. Mexico, for example, which accounts for 25% of global supply, has seen double-digit declines in production in recent years. One of the country’s largest mines, San Julián in Chihuahua state, is nearing the end of its life cycle, which is expected to occur in 2027. The quality of its ore is declining and reserves are being depleted.
Peru, Bolivia and Chile, which together supply almost a third of the world’s silver, are also struggling with declining ore quality, making extraction more expensive and less efficient. Political instability and tighter mining regulations are hindering new investment in these countries’ mining sectors. Overall, Latin American production is expected to stagnate or even decline by the end of the decade, according to analysts at London-based GlobalData.
Meanwhile, the silver market remains in structural deficit for the fifth consecutive year. According to the industry association The Silver Institute, demand is expected to exceed supply by about 95 million ounces this year.
Why is there a growing demand for silver?
Demand for silver is growing not only because investors see it as an attractive investment, but also because it has become indispensable for modern technology and clean energy. Its unique properties, especially its unparalleled electrical and thermal conductivity, make silver indispensable in rapidly developing global industries.
Solar panels, for example, rely on silver paste to conduct electricity. As governments promote renewable energy targets, demand from the photovoltaic sector is expected to grow sharply.
The same is true for the automotive industry: electric cars contain up to two-thirds more silver than conventional cars with internal combustion engines. The metal is used in batteries, cables, and charging infrastructure, making it part of the future of green transportation.
Silver is also playing an increasingly important role in the digital economy. Artificial intelligence (AI) chips and data centers rely on silver for efficient circuits where speed and reliability are paramount.
The precious metal's ability to handle huge electrical loads ensures clean signals and stable operation at scale, while its high thermal conductivity helps dissipate the extreme heat generated by AI.
While silver's use in coins and bullion is in decline, other traditional applications, such as jewelry, electronics, medical devices and consumer goods, remain strong.
The Silver Institute predicts that global industrial demand for silver will grow steadily over the next five years.
Oxford Economics estimated this month that demand for silver in the automotive sector will grow by 3.4% annually through 2031, and that the expected accelerated construction of data centers in the United States (forecast for a 65% growth) will further boost demand. the value of the precious metal.
History of Silver as Money
For millennia, silver has been used as money and an investment. Ancient civilizations used it in trade because it was rare, durable, and easy to separate.
Silver's importance grew even more when European colonizers discovered vast deposits in Latin America, which helped it become a metal for everyday transactions. The Spanish eight-real coin - a silver coin worth eight reales (the old currency of Spain before the peseta and the euro) became the world's first global trading currency, circulating from the Americas to Asia and Europe.
In the 19th century, many nations, including the United States and the United Kingdom, pegged their currencies to both gold and silver. The British pound sterling takes its name from the silver pound.
Silver lost its monetary role in the 20th century when countries abandoned the silver standard - central banks continued to use gold as their reserves, and silver was pushed into industrial production. But also because of its long history as a means of payment, the precious metal has retained its reputation as a hedge against inflationary processes and periods of financial instability.
Author: Nick Martin