Silver has surged to an all-time peak above the $50 an ounce level, driven higher by the combination of growing investor interest and the gravitational pull of gold’s record breaking price rally.
Often described as “gold on steroids”, silver is a notoriously volatile market and has seen its price soar 82% so far this year, leading to intense debate among analysts and investors over whether the rally will continue or fade.
Volatility has been exacerbated by an unusually large gap which has opened up between the spot price for silver in London - the centre for physical trading - and futures prices in New York.
Stocks of silver held in vaults in London have dropped following concerns that both gold and silver imports into the US would be hit by Donald Trump’s tariffs, which led to substantial amounts of both precious metals being shifted to New York from the UK earlier this year. Trump could still impose tariffs on silver as the President in April ordered an investigation which has yet to conclude into the potential national security risks arising from imports of critical minerals.
The price spike has been accompanied by a sharp increase in investor appetite with inflows into silver exchange-traded products (ETPs) reaching $4.8bn so far in 2025, running well ahead of the $0.9bn registered over the whole of last year, according to data from Société Générale, the French investment bank.
In volume terms, metal holdings in silver ETPs have increased by around 13.6% this year while gold ETP holdings have risen by 16%.
Silver ETPs now hold more metal than the inventory of bars stored in official vaults in London, acting as a drain on liquidity which is being reflected in market pricing.
James Steel, HSBC’s veteran precious metals analyst, says investment flows are currently playing a bigger role in driving silver prices than other fundamental factors, such as rising mine supply and demand from jewellery manufacturing and key industrial sectors including electronics and solar power generation.
“The surge in investor demand for hard ‘safe haven’ assets combined with the powerful gravitational pull of record gold prices is likely to keep silver well supported into 2026,” says Steel. He expects silver to trade in a wide range between $40 and $55 an ounce next year with the price declining in the second half of 2026 due to more physical metal supply, an increase in inventories and a cooling in the gold market.
Strong buying interest from central banks over the past three years has been a key factor in driving up gold. But silver does not attract the same demand from central banks as gold. This leaves the smaller and less liquid silver market more reliant on private investment flows to support prices, according to Goldman Sachs. It suggests further price gains are the “most likely medium-term path” for silver as cuts in US interest rates by the Federal Reserve should stimulate more investment flows but the risk of more volatility or even a correction should not be ignored.
“Without a central bank bid [buying interest] to anchor silver prices, even a temporary pullback in investment flows could trigger a disproportionate correction,” says Lina Thomas, commodity strategist at Goldman Sachs.
Although the risk of a correction in the near future also concerns Michael Widmer, commodity strategist at Bank of America in London, he expects further price gains next year with a sixth consecutive annual supply deficit projected for 2026.
An important contributor to these persistent supply deficits has been rising demand from solar panel manufacturers which have become key buyers of silver.
Advances in technology are reducing the volume of silver used per solar photovoltaic panel, but this is being offset by significant increases in renewable energy generation capacity, led by China but also in the US, EU, Soth Africa and Pakistan.
“Continued increases in solar generation capacity should ultimately support silver,” says Widmer. He thinks silver could hit $65 an ounce in 2026 and is forecasting the price to average $56.25 next year, up from a previous projection of $43.75.
