The year 2025 has been nothing short of spectacular for silver, with the precious metal delivering staggering returns that have captivated investors worldwide. A powerful cocktail of robust industrial demand, persistent supply shortages, and supportive monetary policy has propelled prices to multi-year highs, with experts now eyeing an even more ambitious target for the coming year.
Record-Breaking Rally in Silver Prices
International silver prices have skyrocketed by an impressive 158% year-to-date. The domestic story in India is even more dramatic, with spot prices surging by nearly ₹1,45,000 per kilogram, translating to a gain of almost 170% so far this year. On December 26, silver futures climbed to $79.70 per troy ounce, setting the stage for a potential run towards the coveted $100 mark in 2026.
Five Key Factors Fueling the Silver Boom
Analysts point to a confluence of structural and cyclical factors behind silver's meteoric rise. The consensus is that these drivers could sustain the momentum well into the next year.
1. Persistent Supply-Demand Deficit
The fundamental bedrock of the rally is a deep and ongoing market deficit. Data from the Silver Institute reveals that global silver demand exceeded supply for the fourth consecutive year in 2024, resulting in a structural deficit of 148.9 million ounces. "Silver has been in a multi-year supply deficit — global mine output has lagged demand, and above-ground inventories are declining," explained Jigar Trivedi, Senior Research Analyst at Reliance Securities. Ravinder Sharma of SMC Global Securities added that the market is entering its fifth straight year of deficit, with physical inventories in hubs like London and COMEX falling significantly.
2. Unstoppable Industrial Demand
Unlike gold, silver boasts massive industrial utility, which is a primary growth engine. The metal is indispensable for solar panels, electric vehicles (EVs), semiconductors, 5G/AI electronics, and data centres. "The role of silver is not only as a hedge tool... but also a key industrial metal in today's energy transformation landscape," emphasised Aksha Kamboj of IBJA. As these sunrise sectors expand, demand is expected to further outpace mine supply.
3. Monetary Policy and Safe-Haven Appeal
The 0.75 percentage point rate cut by the US Federal Reserve in 2024 and expectations of at least two more cuts in 2025 have reduced the opportunity cost of holding non-yielding assets like silver. This, combined with geopolitical tensions and a potentially weaker US dollar, has bolstered its appeal as a safe-haven investment.
4. The Narrowing Gold-Silver Ratio
The gold-silver ratio, which indicates how many ounces of silver are needed to buy one ounce of gold, has compressed sharply. It currently stands near 60, significantly below its historical average around 90. "If the ratio continues to move toward historical super-cycle levels of 30:1 to 40:1, a move toward $100 becomes mathematically plausible," noted Sharma. This compression signals silver's strong outperformance.
5. Investor Sentiment and FOMO
With gold prices rising about 72% this year, some investors are turning to the more affordable silver, anticipating a catch-up rally. This 'fear of missing out' (FOMO) factor is adding speculative fuel to the fundamentally driven fire.
Outlook: Is $100 per Ounce Achievable in 2026?
The prevailing expert consensus for 2026 places silver in a range of $70 to $85 per ounce. However, the potential for a breakout is widely acknowledged. "The long-discussed $100 per ounce level is no longer viewed as a purely speculative projection," stated Ravinder Sharma. The combination of deepening physical deficits, unwavering industrial demand, and a supportive macroeconomic backdrop creates a plausible path for silver to challenge the triple-digit milestone, marking a new era for the precious metal.
