(Mike Maharrey, Money Metals News Service) Silver was up 20.5 percent in 2024, nearly keeping pace with gold. But as gold set multiple records last year, silver remained well below its all-time highs. This created the impression that silver underperformed.
Could 2025 be silver’s year?
Some mainstream analysts believe it could be.
Saxo Bank head of commodity strategy Ole Hansen recently said silver’s dual role as a monetary and industrial metal creates the potential for a strong upside in the coming year and projected a 30 percent gain.
He noted that in 2024, “increased industrial demand helped create physical tightness in the silver market. Sectors such as electronics and renewable energy, particularly photovoltaic (solar) technologies, significantly contributed to this surge.”
Hansen pointed out that the silver market has run a supply deficit for three straight years with demand outstripping mine production and recycling.
“The expectation of sustained industrial demand is likely to keep silver in a supply deficit into 2025, potentially deepened by a pick-up in ‘paper’ demand through exchange-traded funds.”
Analysts at StoneX Financial are also bullish on silver. In their 2025 Annual Metals Outlook, they picked silver to outperform all precious and base metals.
StoneX analysts said that silver, along with copper and tin, will benefit from green energy and “digital transitions.”
“Even after its strong performance in 2024 (+22%), silver, the precious-industrial hybrid, is expected to collect the laurels in 2025 as the market’s tightening fundamentals and strong future prospects, which have already enticed investors, continue to capture the imagination, partly on the back of the continued long-term prospects for the solar industry – although policies of the new Administration in the United States may dampen this.”
We’ve already seen a surge in industrial demand due to green energy applications, particularly from the solar sector.
Based on preliminary data from the Silver Institute, industrial demand set a record in 2024, topping 700 million ounces for the first time. With mine output declining, the market will likely see its fourth consecutive supply deficit.
StoneX analysts noted that silver ran a cumulative surplus from 2011 through 2023 despite supply deficits in 2022 and 2023. The surplus totaled 78,000 tonnes, about 2.6 times the 2024 industrial demand. However, the analysts pointed out Investors “were more than up to the task of absorbing this metal, with OTC investment of just shy of 100,000 tonnes and ETPs, almost 12,000 tonnes.”
“From late 2024, however, the fundamental balance moves into a deficit that will expand substantially over the next few years on the back of solar, AI, and transport electrification, underpinning an increasing run-down in inventory.”
StoneX analysts also factored in silver’s fundamental role as a monetary metal.
“The relationship with gold has therefore always been a key to silver’s price performance, but in truth it is more complex than that. For much of the past year it has felt as if silver was behaving like a precious metal on the way up, and a base metal on the way down. Statistical analysis bears this out […] During U.S. recessionary periods, silver’s price performance, and correlations, with gold and with copper have shown that the majority of the time it has traded much more in line with copper [than] with gold. In inflationary periods, the reverse has been the case.”
The analysts pinpoint two primary reasons for this dynamic.
“[O]ne is that the nature of silver’s supply (largely by-product of base metals or from industrial scrap) it does not have a market-clearing price; and the other is because of the small army of investors that think of silver as an accessible method of having exposure to [gold] price movements. Add to this the fact that during the period when silver was on the gold standard, private individuals were not allowed to hold gold as an investment, so they turned to silver. This has led to a degree of price volatility such that when gold moves with conviction, silver will move by at least twice as much. This encourages investors and speculators to gear up on gold positions by taking sliver – and often doing it first.”
The analysts speculated that silver may break from this trend and chart its own path due to the weight of the solar sector.
“Silver is an integral part of solar cells and while, as an expensive component, it is liable to be subject to thrifting, it is highly unlikely that it can be substituted. Indeed, the latest generation of PV cells carries a heavier loading than previously. Metals Focus estimates that solar absorbed almost 6,019t of silver in 2023; based on estimates from the International Energy Agency for future power generation, we could be looking at growth rates of 16% per annum through to 2027.”
The AI sector also consumes significant amounts of silver.
Overall, StoneX analysts concluded, “With the markets’ appetite for silver already rekindled by the invigoration of the gold and silver markets in 2024, investors are likely to remain loyal to this metal.”
“Silver will continue to react to any strong activity in gold, while also due for further transition this year as the pre-investment fundamental deficit continues to develop. Possible continued drag from stagnant Europe and any over-supply of solar cells, but a bright long-term future is likely to continue to attract investment and speculative funds.”
The bottom line is silver isn’t priced for the current supply-demand dynamics. The gold-silver ratio is hovering at around 90-1, indicating that silver is on sale when priced in gold. Historically, when the ratio gets distorted to this degree, it tends to snap back to the mean with a vengeance as the silver price spikes to catch up.
And consider that these mainstream analysts aren’t factoring in any kind of economic chaos, which is entirely possible given the Catch-22 facing the Federal Reserve’s monetary policy.
And as analyst Jesse Colombo explained, bearish investor sentiment on silver due to its perceived underperformance last year is bullish from a contrarian perspective.
When you add it all up, there are plenty of reasons to be bullish on silver and it appears at least some in the mainstream are picking up on these dynamics.
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
