2025 Silver Surge: A Quick Analysis

Gold isn't the only commodity that's rallying this year; its younger brother, Silver, is up 75% Year to Date. So what does this really mean, and is it an alternative to gold?

At a Glance

Silver has surged this past year, reaching its all-time highs for the first time in over a decade. Currently, trading at $51.96/oz, silver is up 75% YTD, compared to gold's 56% return YTD.

The drive in price of the "poor man's gold" has interesting implications, as it is driven by both investors looking for safe havens and heavy industry demand. Big returns don't come without big risk. Silver is way more volatile, so the question arises: Is this momentum expected to continue? And should long-term investors be thinking about jumping in?

Silver vs Gold

What's Driving the Surge?

1. A Safe Haven Asset

   During times of economic and political uncertainty (like now), metals and gold tend to increase in value. When tensions are high and investors are scared, they tend to invest in assets like gold to diversify their portfolios. Metals are physical, tangible assets, so there's no counterparty risk, making them very valuable when trust in financial markets slips.

   Of course, Silver is way cheaper than gold (often dubbed as "poor man's gold"!), providing a lower entry cost to diversification.

2. Supply Deficit Crisis

   Silver is scarce; it's currently in its fifth consecutive year of deficit, and the shortfall could exceed 100 million ounces. Major demand and not enough supply raise prices. You may think the solution is recycling! Easier said than done, currently 15-20% of the world's silver is recycled (approximately 150 million to 200 million ounces), which is not enough to cover the shortfall.

3. Industry Demand Explosion

   What's driving the supply deficit even further is the rise of green energy, cars and even AI. Green energy is not cheap; solar panels used approximately 232 million ounces in 2024 and are on track to use similar amounts into 2028 (Investing.com). Silver is also used in wind turbines, 5G, electric vehicles, and chips for AI.

Valuations Justified?

The Bull Case:

• Supply deficit is structural, not cyclical

• Green energy transition is non-negotiable (government mandates)

• Analysts expecting $40+ in 2025, potential ATH above $52.50 in 2026

The Bear Case:

• It's already up over 70% so is the momentum. In fact, as of writing, it tumbled 6% as markets eased over trade friction and credit concerns.

• Solar manufacturers are aggressively reducing silver content (20% reduction in 2024), so demand could lessen.

• Silver is highly volatile, and the last time 2 times it was over $40, it tanked hard.

Our Take: The Dual-Driver Problem

Silver COULD dip hard, and there's an apparent reason why. Silver is running on 2 independent forces mentioned above: Safe Haven Demand and Industry Demand.

Safe Haven Demand is only temporary: Trump tariff threats, Russia-Ukraine conflict, Middle East instability, and Fed policy uncertainty drive uncertainty. This is a speculative premium.

Once geopolitical tension eases (and they always do eventually), the safe haven bid leaves. And with that, you're left with just industry demand, which might not support this $50+ price mark.

The 2010-2011 Playbook (History Repeating)

Look at what happened last time:

Key lesson: Silver went from $49 to $15 in just 4 years despite solar/industrial demand growing throughout that period. Why? The safe-haven premium disappeared.

Conclusion

Don't chase current prices; it's likely there's going to be a pullback, and build small positions for diversification. Putting all your eggs in one basket, especially in silver, is a dangerous play. For long-term players, it's best to invest in Gold ETFs, it's less volatile, accessible, and give moderate returns. But take what we say with a grain of salt, industry professionals target prices of $52 in 2026, highlighting silver's potential stability.

Disclaimer: The content provided on this website is for general information and educational purposes only. It is not intended to, and does not, constitute financial advice, investment advice, or a recommendation to engage in any financial activity. RNEquityInsights is not authorised or regulated by the Financial Conduct Authority (FCA) and does not provide regulated investment services or advice.