Silver’s Time Has Come

SEDA Experts
Dec 18, 2025
9 min read

Updated: Dec 22, 2025

In the May 2024 report Silver Linings Playbook, we made the case that silver was a commodity emerging from a decade of indifference. We argued silver’s coalescing fundamentals put silver on the brink of an explosion in investor interest similar to the uranium industry in 2021. While we were a bit early in our call, silver’s industrial and monetary fundamentals have only strengthened in intervening months. As we update our silver investment thesis in this report, the silver market is finally experiencing breakouts in investor interest, price performance and capital-market activity we had anticipated.

It is well-known that silver demand is bifurcated between industrial applications and investment functions. Specifically, while just 7% of annual gold demand accrues from industrial use, fully 59% of silver demand is industrial in nature. While silver’s investment use carries a significant monetary component, the fact remains that, unlike gold, silver’s industrial and monetary fundamentals are occasionally at odds with one another. Consequently, gold tends to be less vulnerable than silver to recessionary contractions in output and investment. However, when silver’s industrial and investment fundamentals are strongly aligned, as they are today, silver’s performance tends to be more explosive than gold.

Strong Industrial Base

As a bedrock foundation of total demand, silver’s industrial applications have rarely been as compelling as they are today. The renewable energy transition has become a dominant investment theme of our generation. Everyone knows copper is a key metal in the electrification trend, but few recognize the critical role silver plays in maximizing performance and efficiency of solar panels, batteries and EV electronics. In all of these applications, silver’s unrivaled electrical conductivity makes silver the ideal metal for interconnections and contact points.

In reflection of silver’s key role in electrification and renewable trends, industrial silver demand surged 33% between 2021 and 2024 (Figure 1, below). After solar power’s past decade of explosive growth, we suspect photovoltaic silver demand is due for a period of consolidation. However, the AI buildout is shaping up as silver’s next seminal industrial application. AI systems rely on ultra-fast data processing and energy efficiency, and silver is an important component of the high-density circuit boards, edge computing devices and memory chips at the heart of AI infrastructure.

Figure 1: Global Silver Market Supply and Demand (2016-2025E) [The Silver Institute; Metals Focus]

Constrained Supply

On the supply side of the equation, silver mine production has been stagnant for over a decade, with 2024 global output (820M oz.) at a level first reached in 2013 (823M oz). Because the vast majority of silver is mined as a byproduct metal (at copper, gold and lead/zinc mines), silver suffers from chronic underinvestment and notoriously inelastic supply. The combination of growing industrial demand and flat mining supply has resulted in a well-documented structural supply deficit in silver markets. In the four years ended 2004, this deficit totaled 678M oz, and estimates for 2025 project an additional deficit of 117M oz.

In recent years, constrained exploration budgets, a dearth of new discoveries and subdued capital market activity have left the silver sector ripe for investment and project development. Along these lines, we expect especially strong performance from explorers, developers and emerging producers in the silver space during the next two years.

Above-Ground Stocks

How has the silver supply deficit been filled in recent years? Well, as with gold, annual surpluses and deficits in silver supply are always reconciled by additions to, or depletions from, above-ground physical stocks. Unlike gold, however, above-ground silver stocks are extremely difficult to estimate. More than half of historically mined silver has been consumed and the vast majority of the remaining above-ground stock is in the form of jewelry, silverware, and decorative items unlikely to be reclaimed due to sentimental attachment and low relative value. While estimates for the above-ground stock of refined silver products such as bars and coins varies widely, the high-end range of estimates is roughly 6 billion ounces.

As a subset of this above-ground stock, a great deal of attention is paid to freely traded silver inventories at global exchanges such as CME and LBMA. At year-end 2024, these exchange inventories totaled 1.239B oz of silver, down 463M oz since year-end 2020. Because some 600M oz of this exchange inventory are held for ETF’s and another 500M oz are deemed necessary for minimum exchange inventories, a popular thesis suggests further silver supply deficits may result in a “squeeze” of available above-ground supplies. While we are hesitant to draw a direct connection between exchange supplies and industrial demand, it is fair to say global silver inventories are extremely tight.

Investment Demand

Given the 678M oz silver supply deficit during 2021-2024, what factors caused the silver price to trend down through February 2024 and average just $24.65 during the four-year span? The answer to this question is key to understanding the most important variable driving all silver bull markets: investment demand. If investment demand is muted, as was the case through Q1 2024, ample physical silver is available from above-ground stocks to satisfy surges in industrial demand. But when silver investment demand is strong, as it is today, above-ground silver stocks become unavailable to markets and industrial buyers must compete with investors to bid up the silver price.

Further, when silver investment demand gains momentum, impacts on the silver price are far greater than in gold markets because the silver market is so tiny in comparison. By way of example, the World Gold Council (WGC) estimates the above-ground gold stock at year-end 2024 was 216,265 metric tons, worth $27 trillion at current prices. Even setting aside the 45% which WGC estimates is in jewelry and artifacts, this still leaves a roughly $15 trillion above-ground stock of gold, all potentially available at some price. In the case of silver, however, even the very top end of estimates for silver’s investable above-ground stock, say roughly 6 billion ounces, would have a total value of just $285 billion (or roughly 2% of the investable above-ground gold stock).

Importantly, while silver tends to lag gold in early stages of precious-metal bull markets, silver generally outperforms gold as the bull market matures, as is proving to be the case in the current advance. After lagging gold’s 2024 advance (21.5% vs. 27.2%), spot silver is outperforming gold year-to-date through 9/30 (61.4% to 47.0%). If history is any guide, as silver’s legions of individual investors become more bullish, silver investment demand will significantly outstrip available supply in coming months.

Figure 2: Total ETF Holdings of Silver (Troy Ounces) (12/31/19-9/30/25) [Bloomberg]

Among the most transparent measures of silver investment demand are flows into physical silver ETF’s. We plot in Figure 2, above, total ounces held by physical silver ETF’s tracked by Bloomberg. After four years of fairly steady decline, total ounces held in silver ETF’s have surged 132M oz since early February, an increase of 19%. By way of comparison, during the last period of significant increase in silver ETF ounces (between Jan. ’20 and Feb. ’21), total ounces exploded by 423M oz, or 71%. Obviously, there is significant room to run in silver’s accelerating investment demand.

We would also cite two recent developments as potential wild cards for silver investment demand in coming years. First, while global central banks have not held silver as a reserve asset for several decades, that may be changing, if only on a small scale. In late 2024, Russia’s central bank allocated $535 million for additional precious metal purchases and for the first time added silver, platinum and palladium to the approved list. Then, in its Q2 ’25 filings, the Saudi Central Bank reported purchases of 932,000 shares of iShares Silver Trust (SLV) and 203,000 shares of Global X Silver Miners ETF (SIL) worth a combined $40.5 million at time of purchase. While Russian and Saudi silver purchases have so far been di minimis, they telegraph the contributing role silver may play in the global trend to reduce dollar-denominated reserve assets.

And finally, the U.S. Department of the Interior has recently proposed silver for inclusion on the U.S. Critical Minerals List. While silver’s inclusion on the list would not directly constitute “investment” demand, it would certainly lead to widespread stockpiling and increased financialization in the ETF industry. Our only question would be, where are these physical silver inventories supposed to come from? We would suggest they don’t exist.

Silver Mining Equities

Given our bullish expectations for silver, the operative question becomes how best to participate in an industry on the cusp of institutional awakening. In our view, the investment opportunity currently presenting itself in silver mining equities is quite compelling, and we see two factors on collision course to higher prices in the sector. First, for reasons we will detail, the universe of silver mining equites is extremely limited. And second, because generalist investor participation in the sector is still almost nil, when interest in the silver sector broadens (a process we think is just beginning) even small migrations of investment capital will have outsized impact on share prices in the silver sector.

Figure 3: Silver Mine Production by Source Metal (2024)

[Silver Institute; Metals Focus]

Figure 4: Top 20 Silver Producing Companies

(2024) [Silver Institute; Metals Focus]

Backing up a bit, it is well documented that most of the world’s silver is produced as a byproduct of other metal mining. In fact, as shown in Figure 3, above, just 27.8% of 2024 silver production accrued from primary silver mines, with the balance being produced as a byproduct of lead/zinc mines (29.4%), copper mines (26.8%) and gold mines (15.5%). On a corporate level, it logically follows that the majority of silver ounces are produced by global mining majors. Indeed, as shown in Figure 4, above, the Top 20 silver producing companies in 2024 were heavily weighted towards diversified mega-caps. This presents a few challenges for silver industry dynamics.

First, silver’s marginal contribution to corporate cash flows at companies such as BHP and Glencore relegates silver to the backseat of corporate priorities. Therefore, capital expenditures and production plans at mines producing three-fourths of global silver are somewhat detached from silver-market fundamentals, rendering silver supply stubbornly inelastic.

Second, due to silver’s byproduct status, silver exploration budgets are a fraction of what they might be if the majority of silver were produced by primary silver mines. By way of example, S&P Global estimates that total global exploration budgets during the past 15 years have averaged $5.5 billion for gold, $2.5 billion for copper, and just $505 million for silver. From analytical coverage to exploration budgets, the silver industry has been under-nourished for years.

And third, the investible universe of pure silver miners is surprisingly limited. The Solactive Silver Miners Index is composed of 38 individual companies. However, when we screen these companies for primary silver miners (minimum 20% of H1 ‘25 revenues) with market caps above $500 million, we are left with the 15 companies we list in Figure 5, below.

Figure 5: Current Market Capitalizations and First Half 2025 Revenue Breakdown

for 15 Primary Silver Miners [Bloomberg]

Amazingly, the aggregate market cap of these 15 companies totals just $98.4 billion. And demonstrating just how precious primary silver production has become in today’s world, at the 15 companies we identify as the purest plays in the silver mining industry, silver sales constitute just 48% of total First Half 2025 corporate revenue! Given our expectations for silver market dynamics, we find the sheer scarcity value of primary silver mines highly compelling. Throw in strong management teams, proven capital discipline and world class deposits and we believe there are a few likely homeruns in the silver space!

Fed Pivots

Looking forward, we want to highlight an important relationship between the performance of silver equities and Fed policy pivots which garners little mainstream attention. Quite simply, while gold and gold equities are among the best performing investment assets during early stages of a Fed pivot towards easing posture, it turns out that the post-pivot performance of silver equites leads the precious metal pack.

In support of our contention, we document below six recent examples of Fed pivots towards easing posture (including the 50-basis point September 2024 pivot) with subsequent performance of the S&P 500 Index, spot gold, spot silver, the GDM Index and the Solactive Index (SOL). [Once again, we substitute the average performance of Hecla, Coeur and Pan American in our first example.]

Obviously, buying impulses for silver equities are subject to powerful animal spirits when the scent of Fed easing is in the air! In our view, the outperformance of silver shares is eminently rational for at least two reasons. First, when the Fed is commencing an easing cycle, silver’s industrial and investment prospects become strongly aligned. And second, when silver bull markets get started, the limited liquidity of the sector is quickly exposed.

It is obviously impossible to predict whether (or for how long) precious metal equities will outperform during any Fed cycle. All we are saying is that during early stages of Fed pivots toward easing posture, gold shares have historically proven to be a potent tactical investment, and the performance of silver shares has been literally off the charts. And now, with stocks, gold, bitcoin, U.S. home prices and M2 money supply all at all-time highs, the Fed is renewing the cycle of rate cuts it launched in September 2024. If history is any judge, it would be difficult to argue that silver equities do not currently represent a compelling portfolio allocation.

*Kindly note that all data and analysis reflect market conditions as of October 3, 2025.

EXPERT INVOLVED

Trey Reik

Trey Reik is a recognized expert on gold and global monetary policy, with nearly two decades of experience in gold-mining equity research and investment strategy. His work combines rigorous company-level analysis with a deep understanding of central bank policy, liquidity conditions, and the long-term drivers of gold demand.