Silver: The Overlooked Metal Shining Bright in 2025

Silver has long played second fiddle to gold in the world of precious metals, often overshadowed by its flashier counterpart. Yet, as we step into March 2025, silver is quietly positioning itself as a compelling opportunity in the global investment landscape. With supply tightening, demand surging, and its valuation relative to gold sitting at intriguing levels, the case for silver is stronger than it’s been in years. This article explores the current state of the silver market, its supply and demand fundamentals, the historical and present gold/silver ratio, and why now might be an opportune moment to consider this undervalued asset - all while examining broader trends shaping its future.

The Current State of the Silver Market

As of early March 2025, silver’s spot price hovers around $30 per ounce - a figure that reflects a modest uptick from late 2024 but remains far below its historical highs when adjusted for inflation. After peaking near $50 per ounce in 2011, silver has experienced volatility, dipping as low as $12 during the post-pandemic recovery before stabilizing in the mid-$20s. This price action might suggest a lackluster asset, but beneath the surface, the fundamentals tell a different story.

Silver’s market is smaller and more volatile than gold’s, with an annual value of roughly $30 billion compared to gold’s $200 billion-plus. This compact size amplifies the impact of supply and demand shifts, making silver a dynamic - if sometimes unpredictable - player in the commodities space. Recent trends indicate a market in transition, with supply constraints clashing against rising industrial and investment demand. For investors, this tension could signal a breakout moment on the horizon.

Silver Supply: A Shrinking Pipeline

Silver supply is a tale of scarcity in the making. Global mine production peaked in 2016 at approximately 900 million ounces (Moz), according to data from the Silver Institute, but has since trended downward. In 2024, production is estimated at 820 Moz - a decline driven by lower ore grades, reduced byproduct output from lead and zinc mines, and a lack of significant new discoveries. Unlike gold, which is primarily mined for itself, over 70% of silver comes as a byproduct of other metals. This dependency means silver supply is less responsive to its own price signals, creating a structural rigidity.

Exploration budgets for silver-specific projects remain anemic, with mining companies prioritizing more profitable metals like copper or lithium. The average timeline from discovery to production now stretches over a decade, further delaying any supply response. Meanwhile, secondary supply - recycled silver from jewelry, electronics, and industrial scrap - has plateaued at around 180 Moz annually, insufficient to offset the primary production drop. Inventories held by exchanges like the COMEX and LBMA have also dwindled, falling from 350 Moz in 2020 to under 300 Moz by late 2024, per Bloomberg data. This shrinking stockpile underscores a market teetering on the edge of deficit.

Silver Demand: A Dual-Purpose Surge

On the flip side, silver demand is roaring back to life. The Silver Institute projects 2024 global demand at 1.21 billion ounces - the second-highest year on record - and early 2025 estimates suggest this momentum will carry forward. Silver’s unique dual role as both a precious metal and an industrial commodity fuels this growth.

Industrial Powerhouse

Industrial applications account for over 50% of silver demand, with photovoltaic (solar) cells leading the charge. Silver’s unparalleled electrical conductivity makes it essential for solar panels, a sector that consumed 20% of total supply in 2023 - up from virtually nothing two decades ago. As the world races toward net-zero carbon goals, solar installations are expected to grow 15% annually through 2030, per the International Energy Agency (IEA). Electric vehicles (EVs) add another layer, with silver used in batteries and wiring; industry forecasts predict EV-related demand could surpass solar within the decade.

Beyond green tech, silver’s role in electronics - think smartphones, 5G infrastructure, and medical devices - continues to expand. The rise of artificial intelligence (AI) and data centers, which rely on silver-laden hardware, further amplifies this trend. Unlike gold, where industrial use is minimal, silver’s utility ties it directly to global economic growth.

Investment Revival

Investment demand is also rebounding. Physical silver coins and bars saw record purchases in 2021 amid pandemic uncertainty, and while that frenzy cooled, 2024 showed renewed interest as inflation fears lingered. Exchange-traded funds (ETFs) like the iShares Silver Trust (SLV) reported inflows in late 2024, signaling retail and institutional appetite. Silver’s affordability compared to gold - where $30 buys an ounce versus $2,800 for gold - makes it an accessible hedge against economic turbulence.

The result? A persistent physical deficit. Since 2019, demand has outstripped supply by an average of 100 Moz annually, eating into above-ground stocks. This imbalance sets the stage for potential price pressure if trends hold.

The Gold/Silver Ratio: History Meets Opportunity

The gold/silver ratio—the number of silver ounces needed to buy one ounce of gold—offers a lens into their relative valuation. Historically, this ratio has swung widely, reflecting economic conditions, supply dynamics, and investor sentiment.

A Historical Perspective

In ancient times, the ratio was often fixed by decree. The Roman Empire set it at 12:1, reflecting silver’s relative abundance. The U.S. Coinage Act of 1792 pegged it at 15:1 under a bimetallic standard. For centuries, it hovered between 10:1 and 16:1, aligning with geological estimates that silver is 17.5 times more plentiful in the Earth’s crust than gold. The 20th century brought volatility: the ratio spiked to 98:1 in 1939 amid Depression-era gold hoarding, then averaged 47:1 over the century as silver’s industrial role grew.

Recent decades have seen even wider swings. In 1980, during a precious metals boom, it hit 15:1 as the Hunt brothers’ silver cornering briefly sent prices soaring. In 2020, amid COVID-19 uncertainty, it peaked at 126:1 - gold’s safe-haven status outpacing silver’s industrial lag. By early 2021, it narrowed to 65:1 as recovery boosted silver demand.

Where We Stand Today

As of March 8, 2025, with gold at $2,900 and silver at $32, the ratio sits at approximately 90:1. This is above the 100-year average of 40:1 and well beyond the pre-1900 norm of 16:1. A high ratio suggests silver is undervalued relative to gold - a signal that has historically preceded silver rallies. For context, if the ratio reverted to its long-term average, silver would need to climb to $61 per ounce with gold unchanged - roughly an 100% gain. Even a return to the 50:1 mark seen in 2016 would lift silver to $50.

This disparity isn’t just numerical; it reflects silver’s dual nature. Gold thrives as a monetary hedge, while silver’s industrial demand ties it to economic cycles. Today’s high ratio may indicate silver is lagging gold’s safe-haven rally - but its fundamentals suggest a catch-up is overdue.

Why Now Is a Good Time to Invest in Silver

Several converging factors make silver an intriguing prospect in 2025:

1. Supply-Demand Imbalance: The ongoing deficit - demand outpacing supply for six straight years - creates a structural tailwind. With inventories shrinking and mining output flat, any demand spike could ignite prices. Silver’s inelastic supply amplifies this effect; unlike oil or copper, producers can’t quickly ramp up output.
2. Industrial Growth Catalyst: The energy transition is silver’s ace in the hole. Solar and EV demand are locked into long-term growth trajectories, backed by government policies worldwide. China’s push for renewables and the U.S. Inflation Reduction Act ensure this isn’t a passing fad. As industrial offtake rises, silver’s price floor strengthens.
3. Undervaluation Signal: The gold/silver ratio’s elevation screams opportunity. When the ratio exceeds 80:1, silver has historically outperformed gold as it reverts toward the mean. Investors who bought silver at similar levels in 2008 or 2020 reaped rewards as it narrowed. Today’s 90:1 offers a similar setup.
4. Economic Uncertainty: Persistent inflation, geopolitical tensions, and central bank gold buying (1,200 tons in 2024 alone) highlight precious metals’ appeal. Silver, at a fraction of gold’s price, offers a budget-friendly hedge with upside tied to industrial recovery.
5. Technological Edge: Emerging technologies like Small Modular Reactors (SMRs) and next-gen batteries could further boost silver demand. While speculative, these innovations underscore silver’s role in a high-tech future.

Other Considerations: Risks and Rewards

Silver isn’t without risks. Its volatility - more pronounced than gold’s - can deter the faint-hearted. A global recession could dent industrial demand, pushing prices down. Geopolitical calm or a stronger U.S. dollar might also favor gold over silver, widening the ratio further. Mining equities, often used to leverage silver exposure, carry operational risks like labor strikes or regulatory hurdles.

Yet the rewards beckon. Silver’s small market size means modest capital inflows can spark outsized moves. Its dual appeal - industrial utility plus monetary allure - offers diversification gold can’t match. For patient investors, the current setup mirrors past cycles where silver surged from undervalued depths.

Final Thoughts: Silver’s Moment Approaches

At Vorpp Capital, we view silver’s current pricing as a fleeting anomaly, not a reflection of weak fundamentals. The metal’s supply squeeze, industrial demand boom, and historical undervaluation relative to gold paint a picture of untapped potential. As the world pivots toward clean energy and economic uncertainty lingers, silver stands at a crossroads - poised to shine brighter than it has in years.

The best trades often emerge when sentiment lags reality. Silver fits that mold in 2025: overlooked yet essential, volatile yet promising. Whether you’re eyeing physical bullion or mining stocks, the case for silver merits attention in the decade ahead.

Do not consider this article as financial advice. We only showcase our own opinion. Always do your own due diligence before investing in alternative (volatile) opportunities.