According to the Market Outlook 2025 Report by Kotak Securities suggest that, Silver set for strong 2025 as renewable energy demand expected to drive growth! COMEX Silver has experienced a remarkable surge of over 59% in 2024, rallying from its February lows of $21.975 per ounce to a 12-year high of $35 in October. Falling interest rates and heightened safe-haven demand have driven this upward momentum, while increased industrial demand and a supply deficit have provided additional support. Silver began the year on a bearish note, declining to a two-month low of $21.975 per ounce in mid-February, amid global economic concerns, particularly regarding China’s slowdown.
From January highs, prices corrected by 9.5% through February, as a risk-off sentiment bolstered gold, resulting in the gold-silver ratio reaching a 15-month high. During this period, declining ETF holdings and bearish speculative futures positioning added to silver’s weakness. However, the tide turned in the subsequent months, with prices surging over 49% from February lows to $32.75 per ounce with green technology fueling industrial demand and looming persistent supply deficits drive prices higher.
Moreover, silver price broke out of the range to new multi-year highs on expectations that central banks, notably the Fed, would start reducing interest rates and on increased geopolitical tensions. However, from June to August, silver prices corrected over 19%, falling to $26.50 per ounce due to slowing Chinese economic growth and reduced odds of US interest rate cuts. Subsequently, prices rebounded by 32%, reaching new heights in October 2024 as expectations of Federal Reserve rate cuts resurfaced while the global silver market is set to record a physical deficit for the fourth consecutive year, with a deficit of 182 Million Ounce (Moz), little changed from 2023.
This deficit is expected to persist for the foreseeable future. According to Silver Institute, global silver demand is projected to rise by 1% year-over-year (YoY) in 2024, reaching 1.21 billion ounces, the second-highest level since 2010. Industrial applications lead this growth, as demand expected to increase by 7% to over 700 million ounces (Moz) for the first time on record driven by green economy applications, especially in the photovoltaic (PV) sector, and by growing demand from the automotive industry, which benefits from advancements in vehicle electrification and infrastructure development.
Additionally, the rapid adoption of AI technologies has bolstered demand for technological upgrades and infrastructure investments, mitigating declines in consumer electronics. Silver jewelry and silverware demand are forecast to rise by 5%, with India being a key contributor due to strong sales following an import duty cut and lower silver prices. Growth is also supported by higher jewelry consumption in the US and exports from Asia and Europe.
However, physical investment is expected to decline by 15%, hitting a four-year low of 208Moz, as US coin and bar sales fall sharply amid a lack of new crises. Meanwhile, India anticipates stronger physical investment, buoyed by bullish price expectations and reduced import duties. On the supply side, global silver mine production is estimated to grow by 1% YoY to 837 Moz, led by increased output from Mexico, Chile, and the US Recycling is also expected to grow by 5% to a 12-year high, driven by price-sensitive sectors such as western silverware scrap.
Despite this, the market is set to experience 182Moz deficit, consistent with 2023 and marking the fourth consecutive year of shortfall. Investment interest in silver remains strong, with exchange-traded products experiencing their first annual inflows in three years, supported by expectations of Federal Reserve rate cuts and dollar weakness. This sustained physical deficit, alongside high demand from industrial and investment sectors, underscores silver’s enduring appeal in 2024.
After reaching a 12-year high of over $35 per ounce in October 2024, silver prices have entered a correction phase of over 15% in three weeks amid profit-taking and also impacted by economic developments in China, where recent measures to stimulate growth have fallen short of expectations. The Chinese government’s announcement of a 10 trillion Yuan debt package aimed at boosting local financing and economic stability disappointed markets, as it lacked direct stimulus components.
This has negatively affected industrial metals, including silver, which is essential for photovoltaic (PV) cells in solar energy production. Moreover, the silver demand has been further clouded by Chinese solar panel manufacturers scaling back production. Concerns over potential US tariffs on Chinese solar imports, have heightened uncertainty about China’s economic recovery. Currently, silver is considered undervalued and benefits from its versatile applications across industrial and investment sectors may drive prices further in the coming years.
The Federal Reserve and the European Central Bank have initiated rate cuts to address economic slowdowns, boosting commodity demand. A significant driver of silver demand is its role in green energy and technological advancements is growing strong. Moreover, Industrial demand, particularly from solar panels, electric vehicles, and 5G technology, continues to expand as global efforts to adopt sustainable energy solutions intensify.
The rise of the Internet of Things (IoT) and OLED lighting further underscores silver’s importance in modern technology. Additionally, increased demand for silverware, jewelry, and consumer electronics strengthens the outlook for silver consumption. With robust industrial applications leading the way, the silver market is expected to face a substantial deficit in 2024 as per the demand supply equations published by the Silver Institute.
This underscores the metal’s critical role in both traditional and emerging markets, making it a focal point for long-term investment and industrial strategies. Silver’s strong performance in 2024 and its promising outlook for 2025 highlight its unique position in the precious metals market. While gold retains its status as a safe-haven asset, silver’s industrial applications and supply-demand dynamics position it as a critical commodity for the green economy. As the world continues its transition toward renewable energy and technological modernisation, silver is poised to shine even brighter in the years to come.
Heera Zhaveraat (HZ International) A Diamond, Watch and Jewellery Trade Promotion Magazine provide dealers and manufactures with the key analytical information they need to succeed in the luxury industry. Pricing, availability and market information in the Magazine provides a critical edge.
