Introduction: Silver Steps Out of Gold’s Shadow

Silver has decisively stepped out of gold’s shadow, shedding its label as the “poor man’s gold” to emerge as a high-voltage market powerhouse. In 2025, silver prices have surged over 100% year to date, significantly outperforming gold, driven by a weakening U.S. dollar, softer bond yields, and rising geopolitical uncertainty (Reuters, Trading Economics).

Beyond macro tailwinds, the rally is structurally anchored. According to the Silver Institute, global silver markets have recorded a fifth consecutive annual supply deficit, while industrial demand hit a record ~680 million ounces in 2024, led by solar PV, EVs, and data-center infrastructure. With silver now integral to clean energy and digital transformation, it is no longer just a precious metal—it is fast becoming the indispensable DNA of the future economy.

Tracking Worldwide Silver Production

Among the world’s silver producers, Mexico ranks first with a production share of roughly 24% of the global total, firmly establishing itself as the dominant force in global silver mining. Annual production consistently averages over 200 Moz, supported by extensive silver-dominant deposits. China and Peru follow as the next largest contributors, each accounting for around 13% of global supply.

Production dynamics across countries reveal clear structural differences. Peru, traditionally a silver heavyweight, witnessed a decline from over 102.82 Moz to approximately 99.67 Moz, largely due to operational disruptions during the COVID-19 lockdown period. In contrast, China’s output remains remarkably stable, fluctuating between 109.28 Moz and 106.1 Moz, as silver is primarily extracted as a by-product of large-scale base metal mining. Similar by-product driven stability is visible in Bolivia and Poland, where production remains closely tied to base metal operations such as KGHM’s copper output in Poland.

Production Snapshot

• Mexico: ~24% global share
• China & Peru: ~13% each
• Bolivia & Poland: Stable by-product producers

Global Mine Production Outlook

Global silver mine production increased by 0.9% in 2024 to 819.7 Moz, with lead and zinc mines remaining the largest contributors, though their output was largely flat year-on-year. The strongest growth came from gold mines, where silver output rose 12% y/y to 13.9 Moz, marking a three-year high. Mexico continued to lead global production, followed by China, Peru, Bolivia, and Chile.

Looking ahead, mine production is expected to grow at a moderate pace. In 2025, global output is forecast to rise 2% y/y to 835 Moz, contributing to a total cumulative silver supply of 1.03 Boz, also reflecting a 2% annual increase.

Mine Supply Snapshot

• 2024 production: 819.7 Moz (+0.9% y/y)
• 2025 forecast: 835 Moz (+2% y/y)
• Total supply (2025): 1.03 Boz

The Multi Faceted Demand for Silver

Silver is increasingly positioned as a critical “next generation metal,” central to both the global green energy transition and the rapid digital transformation underway. While silver has been embedded in society for centuries, its role has expanded sharply across electricals, jewellery, and investment channels.

Today, global silver consumption is predominantly industrial, accounting for 58.6% of total demand. Jewelry follows with an 18% share, while physical investment contributes 16.5%. The remainder is distributed across silverware (4.7%) and photography (2.2%).

The structural shift toward industrial usage is unmistakable. Photovoltaic demand now represents 29% of total industrial consumption, up from just 11% in 2014. At the same time, the electric vehicle transition is accelerating rapidly, with EVs accounting for 21% of global light vehicle production in 2024, compared with only 3% in 2019. Global EV production is projected to expand at a robust 13% CAGR between 2025 and 2031.

Demand Mix Snapshot

• Industrial: 58.6%
• Jewelry: 18%
• Physical investment: 16.5%

Industrial Silver Demand: The Automotive Engine

Key Drivers

• Rising electrification of vehicles
• Higher silver intensity in BEVs versus ICE vehicles
• Increasing use of Electronic Control Units (ECUs)

Demand Outlook

• Automotive silver demand projected to grow at a 3.4% CAGR through 2031
• 2024 demand split:
  • ICE vehicles: 55%
  • EVs: 30%

Forward Trajectory

• EVs expected to become the largest source of automotive silver demand by 2027
• EV share projected to rise to 59% by 2031

Notably, while ICE vehicles drove 55% of silver demand in 2024 (with EVs at 30%), the rapid rise in EV production means electric vehicles are projected to become the single largest source of silver demand within the automotive sector by 2027, ultimately commanding a 59% share by 2031.

AI Fuels Surge in Industrial Silver Demand

Why Data Centers Matter

• Backbone of cloud computing, AI workloads, and digital infrastructure
• Silver is critical for high-efficiency electrical conductivity

Explosive Growth Metrics

• Global data centers increased 11x since 2000, exceeding 4,600 facilities
• Total IT power capacity surged 53x, from 0.93 GW to ~50 GW by 2025
• Represents a 5,252% increase in power consumption

Impact on Silver

• Rapid hardware deployment directly drives higher industrial silver consumption

Jewelry and Silverware Demand Under Pressure

2024 Performance

• Silver jewelry fabrication rose 3% y/y to 208.7 Moz
• Growth led primarily by India, supported by:
  • Import duty reductions
  • Improved rural demand
  • Shift toward higher purity jewelry

2025 Outlook

• Higher prices expected to trigger demand correction
• Jewelry fabrication forecast to decline 6% to 196.2 Moz
• Physical investment demand projected to rise 7% to 204 Moz, versus 190.9 Moz in 2024

Empty Vaults, Full Momentum: Silver’s Structural Deficit

Demand–Supply Snapshot

• 2024 global demand declined 3% y/y to 1.16 Boz
• Weakness seen in physical investment and photography
• Record industrial demand offset these declines

2025 Projections

• Demand expected to ease 1% y/y to 1.14 Boz due to solar thrifting
• Supply growth limited to 2%, reaching 1.03 Boz

Structural Reality

• Market now in its fifth consecutive year of deficit
• Supply–demand gap expected to support prices for 5–7 years

Silver Climbs as the U.S. Economy Falters

The steady five-year supply deficit, coupled with robust industrial and investment demand, has driven silver prices substantially higher. This ascent is accelerated by “cherry-on-top” catalysts like geopolitical risk, tariff wars, and a deteriorating U.S. economic outlook.

Weakness in the U.S. is confirmed by the Dollar Index remaining consistently below the 100 mark since May (hitting 96.218 in September). Additionally, the U.S. 10-year bond yield has failed to break the 4.25% ceiling, hovering within 3.957%-4.25% for the past four months. The labor market reflects this turbulence: the unemployment rate climbed to 4.6% in October 2025, up from 4.3%, marking the highest level since October 2021.

As the U.S. economy falters, silver’s safe-haven status has gained prominence among investors, delivering returns exceeding 100% over the year and solidifying its position as a leading investment option.

Inverse Relationship: Silver vs Dollar Index and Bond Yields

The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, has faced significant headwinds this year. The index failed to sustain levels above 100, eventually slipping below the 98 mark to touch a low of 96.218, a level not seen since February 2022.

Simultaneously, the US 10-year Treasury yield has been on a downward trajectory since late 2024, reaching a pivotal low of 3.936% in October 2025. This environment of cooling yields and a softening dollar has significantly bolstered silver’s appeal.

As a non-yielding asset, silver is currently benefiting from a ‘double tailwind’: the macro-support of a weaker dollar and the structural support of a persistent global supply deficit.

Chinese Silver Market Dynamics

The silver market in China is undergoing a profound structural revaluation, driven by a “triple-threat” demand surge spanning Solar PV, AI infrastructure, and domestic investment. With China’s property sector stuck in a prolonged downturn, investors have increasingly turned to physical silver as a store of value, pushing demand to record highs in late 2025.

This demand surge is colliding with a rigid supply framework. Although China remains a key producer at approximately 3,300 metric tons annually, domestic output is insufficient to offset a widening global silver deficit of nearly 400 million ounces.

Key Stress Indicators

• Shanghai Futures Exchange (SHFE) inventories down 70% from 2021 peaks
  
• Current SHFE stocks at just 890.7 metric tons (as of December 16, 2025)
  

For strategic investors, these decade-low inventories and the deepening supply-demand imbalance point to acute physical tightness in the Chinese market, significantly increasing the probability of price volatility and upside risk.

China Reclassifies Silver as a Critical Strategic Asset

The global silver market is bracing for a fundamental paradigm shift as the Chinese Ministry of Commerce (MOFCOM) reintroduces strict export quotas effective January 1, 2026. Transitioning away from its previous flexible trade model, Beijing is moving toward a centralized, state-traded system that prioritizes “Resource Sovereignty” over international trade volume.

Under the new framework, export licenses will be restricted to a select tier of state-certified producers, typically those with an annual output exceeding 80 metric tons, effectively consolidating the market and sidelining smaller private refiners. 

By reclassifying silver as a critical mineral essential for national defense and high-growth sectors like Solar PV and AI infrastructure, China is signaling its intent to hoard domestic supply to meet its aggressive 2026 industrial targets.

For global markets, this policy shift likely marks the end of reliable Chinese silver outflows, threatening to turn the current inventory “crunch” into a full-scale structural shortage.

Silver Over the Last Decade: From Dormancy to Dominance

Over the past decade, silver has undergone a striking transformation, evolving from a largely stagnant commodity into one of the strongest-performing assets in global markets.

Between 2015 and 2019, the “White Metal” remained in a prolonged accumulation phase, trading in a narrow band of ₹37,000–₹45,000, overshadowed by a buoyant equity market and limited industrial momentum.

The trend shifted during the “Awakening” phase (2020–2023), as pandemic-led supply chain disruptions and a surge in global solar installations pushed silver decisively above the ₹70,000 mark.

The Era of Scarcity (2024–2025)

• Fifth consecutive year of global supply deficit
  
• Rapid demand growth from AI data centers and EVs
  
• Prices more than doubled in a single year
  

This convergence of structural scarcity and technology-led demand culminated in a historic late-2025 melt-up, propelling prices beyond ₹2,00,000/kg and firmly redefining silver as a critical high-tech asset of the modern economy.

The Global Bull Run in Silver Prices

Silver prices have demonstrated exceptional strength, with the domestic MCX contract surging past Rs110,000 in June 2025 and subsequently reaching a record high of Rs 210,615. Although some profit-booking is expected, the metal is poised to remain resilient due to supportive fundamental factors.

Globally, COMEX silver also breached a key level of $34.66 in June, rising to a new peak of 64.6584. Based on current positive fundamentals and assuming continued U.S. economic instability next year, domestic silver prices are projected to reach Rs225,000, with Rs250,000 as the next target upon successful breakthrough. Internationally, $70 is on the charts, and $75 is a distinct possibility without any adverse fundamental developments.

Disclaimer: This article is for informational purposes only and is not investment advice. Commodity markets, including silver, are volatile. Please consult a financial advisor before making trading decisions.

About Author

Moumita Samanta

Moumita Samanta is a Senior Fundamental Research Analyst at Rmoney, bringing a unique and powerful combination of financial market acumen and specialized industry expertise to our research team. With over seven years of experience as a fundamental analyst, Moumita has cultivated a deep understanding of investment dynamics across both the equity and commodity markets, previously contributing to the success of organizations like SS wealthStreet, Advisorymadi.com, and Globe Capital. What truly sets Moumita apart is her extensive 12-year background in the bullion market and the gems and jewellery industry. This hands-on, sector-specific knowledge provides an invaluable perspective, particularly when analyzing commodity-linked assets and luxury retail segments.