Silver recently recorded a new all-time high at $64 per ounce. While gold has continued to outperform the white metal as a store of value, Deutsche Welle examines why silver is once again gaining growing global importance.
What happened to silver prices in 2025?
Silver has experienced a powerful rally, with prices more than doubling from around $30 per ounce (€24.54) at the start of the year to a record high of $64.65 per ounce on December 12.
The metal was trading near $30 on COMEX, the commodities arm of the New York Mercantile Exchange (NYMEX), in January. It then moved within a $37–$40 range throughout the summer before decisively breaking higher in September.
The pace of gains accelerated thereafter, with the strongest advances recorded during the final three months of the year.
The roughly 110% rise since the start of the year marks a dramatic turnaround for silver, long viewed as gold’s “poor cousin,” as gold typically outperforms during bullish markets.
Despite warnings from some investors about the potential for a short-term price correction, sentiment toward silver remains broadly positive heading into next year.
Prior to 2025, silver spent most of the past decade trading between $15 and $25 per ounce, with occasional spikes above $30 during periods of speculative enthusiasm, but it failed to sustain lasting upside momentum.
Even at its previous peaks in 1980 and 2011, silver reached around $49 per ounce, well below gold’s rallies above $1,900 per ounce.
This year, however, gold has lagged silver in relative terms, rising by about 60% to roughly $4,340 per ounce, compared with silver’s more-than-doubling.
Silver’s break to record levels has been partly driven by a weaker US dollar and expectations of interest rate cuts by the Federal Reserve, which tend to enhance the appeal of precious metals as safe-haven assets.
More significant drivers, however, have played a decisive role, most notably tightening global supply as production struggles to keep pace with demand.
What challenges does silver production face?
Latin America, which accounts for more than half of global silver output, is facing declining production as mines age and reserves are depleted.
Mexico, responsible for around 25% of global supply, has recorded double-digit production declines in recent years.
One of the country’s largest mines, San Julian in northern Chihuahua state, is approaching the end of its operational life by 2027. The mine is a key asset for Fresnillo, but ore quality is deteriorating and reserves are being exhausted.
At the same time, Peru, Bolivia, and Chile, which together provide roughly one-third of global silver supply, are experiencing falling ore grades, making extraction more costly and less efficient.
These countries are also grappling with political instability and stricter mining regulations, which have discouraged fresh investment in the sector.
According to analysts at London-based GlobalData, silver production in Latin America is expected to stagnate or begin declining by the end of the decade unless new deposits are discovered or supportive policies are introduced.
Meanwhile, the silver market has been in a structural deficit for a fifth consecutive year, according to the Silver Institute.
The institute estimates that global demand will exceed supply by around 95 million ounces this year.
Why is demand for silver increasing?
Demand for silver is rising not only because it is viewed as a store of value, but also because it has become a critical component in modern technology and clean energy.
Its unique properties, including the highest electrical and thermal conductivity of any metal, make it indispensable for fast-growing global industries.
Solar panels, for example, rely on silver paste to conduct electricity, and as governments push toward renewable energy targets, demand from the solar sector is expected to rise sharply.
Electric vehicles require up to two-thirds more silver than internal combustion engine vehicles, as the metal is used in batteries, wiring, and charging infrastructure, reinforcing silver’s role in the future of green transportation.
Silver is also playing an increasingly important role in the digital economy. Artificial intelligence chips and data centers rely on silver to ensure highly efficient electrical circuits, where speed and reliability are critical.
Silver’s ability to handle large electrical loads helps maintain signal integrity and stable performance at scale, while its high thermal conductivity aids in dissipating intense heat generated by AI workloads.
Despite declining use in coins and bullion, other traditional applications such as jewelry, electronics, medical devices, and consumer goods remain strong.
The Silver Institute expects global industrial demand for silver to continue growing steadily over the next five years.
Oxford Economics said this month that silver demand from the automotive sector will grow at an annual rate of 3.4% through 2031, and that the metal will benefit from a projected 65% increase in US data center construction over the same period.
What is silver’s historical role as money?
For thousands of years, silver has been trusted as a medium of exchange and a store of value. Ancient civilizations used it in trade due to its rarity, durability, and divisibility.
Silver’s importance expanded after European colonizers discovered vast deposits in Latin America, helping it become a metal of everyday transactions.
Spanish pieces of eight, silver coins worth eight reales, became the world’s first global trading currency, circulating from the Americas to Europe and Asia.
In the 19th century, many countries, including the United States and the United Kingdom, pegged their currencies to both gold and silver. The term “pound sterling” originally referred to a pound of silver.
Silver lost its monetary role in the 20th century as countries abandoned the silver standard. Central banks retained gold, while silver was increasingly directed toward industrial uses.
Nevertheless, silver has preserved its reputation as a hedge against inflation and financial turmoil, a legacy rooted in its long history as everyday money.
