Silver is ripping the markets, and how! On December 10, 2025, spot silver prices surged past $61 per troy ounce, marking an all-time high and cementing one of the most impressive commodity rallies in recent history.
Note that silver started this year around the $28.96 level. Looking at the monthly chart, silver has been on the rise for non-stop eight consecutive months and has increased 88.6% since May.
With year-to-date gains exceeding 106%, silver has outperformed gold's 58% rise, the Nasdaq 100's 22.4% gain, and the S&P 500's 16.5% climb, forcing investors to reconsider this often-overlooked asset.
Source: TradingView
An interesting mix of factors is driving the stellar rally in spot silver prices:
Monetary Policy Tailwinds
The Federal Reserve is widely expected to lower the interest rates as the FOMC concludes its two-day meeting today. Markets are pricing in a 90% probability of a 25-basis point rate cut at the December meeting, which would mark the third such reduction in 2025.
The updated Fed dot plot and Chairman Powell's comments will be pivotal in shaping market expectations for further rate cuts in 2026. Markets broadly expect two more Fed cuts in 2026. Notably, a more accommodative monetary environment historically favors precious metals.
Lower interest rates typically weigh on the U.S. dollar, making commodities like silver more attractive to international buyers while reducing the opportunity cost of holding non-yielding assets.
Supply Tightness in Physical Market Reveals True Scarcity
Perhaps the most compelling evidence of silver's fundamental strength came during the Thanksgiving holiday period. A cooling system failure at a CyrusOne data center disrupted the Chicago Mercantile Exchange, causing a ten-hour trading halt on Comex silver futures.
This event exposed a critical truth: paper derivatives often set commodity prices, but when those markets pause, the physical market reasserts itself. The rapid price spike during the outage demonstrated that deliverable silver is in critically short supply, validating concerns about inventory tightness.
Silver lease rates, the cost of borrowing physical metal from bullion holders to fulfill delivery obligations, have continued climbing, providing further confirmation of supply constraints. When it becomes increasingly expensive to secure physical metal for delivery, it signals genuine scarcity rather than paper market speculation.
Industrial Demand: The Game-Changing Factor
Unlike gold, which serves primarily as a store of value and jewelry components, silver possesses unique industrial properties that make it indispensable to modern technology.
With unmatched electrical conductivity, superior thermal efficiency, and high optical reflectivity, silver has become a critical component across multiple high-growth industries.
Solar Energy's Insatiable Appetite
The solar industry represents perhaps the most significant driver of silver demand growth. A major technological transition is underway as manufacturers shift from older PERC solar cell technology to newer, more efficient designs known as TOPCon and Heterojunction (HJT) cells.
This transition has profound implications for silver consumption. While older PERC cells used approximately 10 milligrams of silver per watt, these advanced high-efficiency cells require between 13 and 22 milligrams per watt. As global solar capacity continues its exponential growth, this increased silver intensity per panel is creating unprecedented demand that cannot be easily reduced through thrifting.
Historically, when commodity prices rise, manufacturers attempt to reduce the amount of material used in their products. However, the physics of these new solar technologies make significant silver reduction difficult without sacrificing the efficiency gains that justify their adoption. This creates a situation where the solar industry requires more silver even as prices rise, fundamentally altering the traditional demand response to higher prices.
Electric Vehicles and Infrastructure
The electric vehicle revolution and its supporting infrastructure represent another major demand pillar. Silver's superior electrical conductivity makes it essential for EV charging stations, battery management systems, and electrical components within vehicles themselves.
As EV adoption accelerates globally, this demand stream is projected to grow substantially through 2030. According to GrandViewResearch, the global electric vehicle market size is projected to hit USD 6,523.97 billion by 2030 and was estimated at USD 1,328.08 billion in 2024, indicating a CAGR of 32.5% from 2025 to 2030.
Data Centers and the Digital Economy
The exponential growth of data centers, driven by cloud computing, artificial intelligence, and digital transformation, creates additional industrial demand. These facilities require extensive electrical infrastructure where silver’s superior conductivity makes it the material of choice for high-performance applications.
The Structural Supply Deficit
Behind the headlines lies a sobering reality: the world is using more silver than miners can extract from the ground. 2026 is on track to mark the fifth consecutive year of structural supply deficit, with the Silver Institute projecting a shortfall of nearly 95 million ounces.
Inventories in Shanghai warehouses have fallen to decade lows, eliminating the buffer that traditionally absorbs temporary supply-demand imbalances. When inventory cushions disappear, price volatility increases as the market becomes more sensitive to any supply disruption or demand spike.
The Critical Mineral Designation
In November 2025, the U.S. government officially designated silver as a Critical Mineral, acknowledging its strategic importance to national security and economic competitiveness. The United States imports nearly 64% of the silver it consumes, creating potential vulnerability in the supply chain.
Following this designation, Section 232 investigations under the Trade Expansion Act have raised the specter of future tariffs on imported metals. This political maneuvering has triggered precautionary buying, with approximately 75 million ounces flowing into U.S. vaults since October as both government and private sector entities seek to secure supply ahead of potential policy changes.
This strategic stockpiling effectively puts a floor under prices, as government buyers compete with industrial consumers for limited available supply. The critical mineral designation transforms silver from purely a market-driven commodity into one with strategic policy considerations.
Falling Gold-Silver Ratio: A Valuation Perspective
The Gold-Silver Ratio, which measures how many ounces of silver are needed to purchase one ounce of gold, currently hovers near 68.78, a level last seen in July 2021. This year, the ratio has seen its peak at 104.7 in April 2025. Interestingly, the ratio has dipped below 70 for the first time in 53 months.
Seen as a key gauge of investor sentiment versus economic growth, the gold-to-silver price ratio averaged 67.6 per ounce in the 2010s. Despite silver's impressive rally, it remains statistically undervalued relative to gold by historical standards.
Source: TradingView
For the ratio to return to its long-term normal of around the 65 level, silver would need to continue outperforming gold significantly from current levels.
While this ratio should not be used in isolation as a timing tool, it provides context suggesting that silver rally may have further room to run even after its record-breaking performance.
How to Trade Silver Online?
MultiBank Group offers competitive conditions for traders looking to capitalize on the silver rally, including spreads starting from just $0.01 on silver, leverage of up to 100:1, and ultra-fast execution that's critical during periods of high volatility.
When markets move as rapidly as silver has in recent months, execution speed can significantly impact trading outcomes.
When choosing how to trade silver, investors should consider factors including time horizon, risk tolerance, capital available, and whether the goal is long-term investment or active trading.
Volatility and Risk Management
While the fundamentals supporting silver appear robust, the metal is historically more volatile than gold. Silver's smaller market size and dual role as both an industrial and precious metal can create sharp price swings. The recent surge to record highs may lead to short-term volatility as traders take profits and test support levels.
Technical analysts note resistance levels around $62-64 per ounce, suggesting that silver may consolidate or pull back before attempting to break higher.
However, the combination of critically low inventories, surging industrial demand, accommodative monetary policy, and strategic stockpiling suggests that any significant pullback may be viewed as a buying opportunity by investors convinced of the structural bull case.
The New Normal for Silver
Silver often called the poor man's gold, appears to have entered a new era.
Years of underinvestment in mining have collided with explosive growth in industrial applications that cannot easily substitute away from silver.
The designation of critical mineral status, ongoing supply deficits, and the technological transition toward silver-intensive solar cells suggest that the floor for silver prices has moved permanently higher.
The question is no longer whether silver deserves attention alongside its more glamorous cousin gold, but rather how high this rally can ultimately go as fundamental supply tightness meets unprecedented industrial demand.
Disclaimer: This article is for educational purposes only. Trading silver and other precious metals involves significant risk and may not be suitable for all investors. The high degree of leverage available can work against you as well as for you. Before deciding to trade, you should carefully consider your investment objectives, level of experience, and risk appetite. Past performance is not indicative of future results.
