Surging Silver Demand and the Global Push: What Factors are Driving This?

Surging Silver Demand and the Global Push: What Factors are Driving This?

Silver is not just a secondary precious metal anymore; it has taken centre stage in 2025. Silver prices are soaring, due to high industrial activity. With silver demand in electronics and solar industry, plus renewed investor interest amidst the lack of supply, this demand has only grown.

What is driving this surging silver demand, and where is this trend leading us? Let’s dive in.

Industrial Demand for Silver: Sectors Fueling Silver’s Rise

In today’s atmosphere, silver’s appeal lies in its dual role: as a precious metal and as an industrial essential.

• Solar & photovoltaics: The demand of silver in the solar industry is the highest. Silver metal consumption was 19% and silver paste consumption was 85% in 2024.

• Electronics, semiconductors, and chips: Silver’s superior conductivity makes it ideal in printed circuit boards, connectors, and sensors. As 5G, AI, and IoT adoption expands, silver demand in technology sector will increase.

• Electric vehicles & batteries: EVs need more complex wiring, sensors and stability systems, many of which incorporate silver. Its role in battery management and EV electronics is also growing.

• Jewellery, silverware & coins: Traditional uses persist. During festivals and in markets like India, jewellery and gift demand still contribute meaningfully to silver consumption.

• Medical and healthcare use: Silver also finds use in antimicrobial coatings, wound dressings, and medical devices, given its germicidal properties, boosting demand in healthcare.

Such industrial demand for silver is now becoming a dominant driver in viewing silver as an investment asset, rather than just a traditional gifting option in India.

Price Performance: Silver Outpacing Gold

Silver's recent rally has been extraordinary. It climbed to record levels in 2025, reaching over US$53 per ounce, an 85 % gain year-to-date, well ahead of gold’s rise.

Silver’s smaller market size and heavier industrial usage make it more volatile and responsive to demand shifts than gold. Today's reasons behind the silver price rise are more rooted in fundamentals than mere speculation.

Global Silver Consumption Trends

Today’s silver market shows structural shifts and the reasons for increased silver demand:

• Domination by industrial shares: Industrial consumption makes approximately 59% of the total demand of silver.

• Repeat shortages in supply: World supply lags behind demand. The World Silver Survey 2025 has a deficit of approximately 117.6 million ounces in the year 2025.

• Inelastic supply response: Over 70 % of silver is produced as a byproduct of mining other metals, limiting how quickly supply can respond to rising prices.

• Strong growth in East Asia: Industrial silver demand in East Asia rose ~4 % in recent periods, driven by expanded electronics and green energy deployment.

• Market size expansion: The global silver market was valued at ~USD 87.1 billion in 2024 and is projected to grow steadily.

These global silver consumption trends indicate that not only is demand growing, but it is also structurally changing.

Bank & Sovereign Buying: Silver as a Reserve Asset

One of the more intriguing developments: central banks and sovereign entities are increasingly eyeing silver as a reserve or strategic asset.

• Russia has reportedly allocated significant funds specifically for silver in its reserve buying program.

• Saudi Arabia’s central bank has entered the silver market, acquiring shares in silver ETFs like SLV.

• Analysts note that central bank buying of gold has long been standard; now, a pivot to silver may validate silver as an investment asset beyond retail markets.

If sovereigns adopt silver more broadly, that could mark a paradigm shift in how the metal is viewed.

Silver as an Investment Asset: ETFs and Physical Silver on the Rise

Retail and institutional investors are also pushing demand upward.

• Silver ETFs and funds are seeing record inflows. In India, the Nippon India Silver ETF recently crossed ₹10,000 crore AUM, showing growing trust in that format.

• Some funds have suspended new inflows, citing supply constraints and rising premiums. UTI AMC paused new investments due to difficulty sourcing physical silver.

• Physical demand, coins, bars and silverware, is heating up, particularly in festivals or periods of market stress.

As more people recognise silver as an investment asset, demand from this segment may further accelerate.

What Does the Future Hold?

• The future of silver as an investment asset looks promising, especially if green energy and electrification trends accelerate.

• Forecasts point upward: Some analysts believe silver could rally another 20 % if deficits deepen.

• But caution: silver’s volatility is high; macro shocks, rate hikes, or supply surprises can swing sentiment hard.

• Keeping an eye on industrial demand for silver, investment demand for silver, and policy shifts will be critical.

These are not speculative ideas; they reflect the multifaceted drivers behind why silver is in high demand now.

Conclusion

The 2025 comeback of silver is not accidental; there is a combination of multiple forces, including industrial use flourishing, a lack of sufficient supply response, and investor and sovereign interest. The rally raises a key issue: Will silver find a new wave on its way as technology, energy and capital markets demand grow, or will it hit a ceiling against the macro headwinds? The time will tell.

Sources:

International Precious Metals Institute
WisdomTree Europe
The Silver Institute
Reuters
Financial Times
Sprott
GoldSilver
Crux Investor
Straits Research
CryptoSlate
Tavex Bullion
etftrends.com
The Economic Times
Reuters
The Economic Times