Rapidly increasing industrial and military demand for silver could deplete global inventories by as early as next year. 

Silver demand has outstripped supply for three straight years and the Silver Institute projects another market deficit this year.

In 2023, the silver market charted a structural deficit of 184.3 million ounces. The projection is for an even larger supply shortfall this year in the neighborhood of 215 million ounces. This would be the second-largest silver market deficit ever recorded.

According to an article published by the Jerusalem Post, surging demand coupled with declining mine output “could have far-reaching implications for markets, investors, and industries reliant on the precious metal.”

“As the clock ticks towards 2025, the global market braces for the profound impact of industrial and military silver demand on inventories. Stakeholders across sectors must navigate this evolving landscape with strategic foresight and innovation to mitigate the looming supply crunch.”

Rapidly rising industrial demand, specifically in the solar energy sector, is driving the growing market deficits.

Industrial demand for silver set a record of 654.4 million ounces in 2023 and it is expected to hit new highs this year. According to The Silver Institute, ongoing structural gains from green economy applications underpinned this surge in silver demand.

"Higher than expected photovoltaic (PV) capacity additions and faster adoption of new-generation solar cells raised global electrical & electronics demand by a substantial 20 percent. At the same time, other green-related applications, including power grid construction and automotive electrification, also contributed to the gains."

According to a research paper by scientists at UNSW, solar manufacturers will likely require over 20 percent of the current annual silver supply by 2027.

By 2050, solar panel production will use approximately 85–98 percent of the current global silver reserves.

Demand for silver is also growing in the tech sector due to its conductivity and reflectivity.

Meanwhile, militaries around the world are using more silver. According to the Jerusalem Post, “Silver's use in advanced defense systems, including weaponry, communication devices, and surveillance equipment, is crucial due to its superior electrical conductivity and resistance to corrosion.”

Even as demand increases, silver mines are producing less silver and there are fewer discoveries of new deposits. According to the Jerusalem Post, “The exploration of new silver deposits is becoming increasingly difficult and costly.”

“As high-quality ores become scarcer, mining companies face challenges in maintaining production levels.”

SBC Global Research projects that “without substantial investment in new mining projects or recycling initiatives, the silver market may face a notable supply-demand imbalance by mid-decade, potentially driving up prices and intensifying competition for this essential metal.”

The Post highlighted three market implications of this silver supply crunch.

  • Price volatility
  • Investment opportunities
  • Supply chain strain

Silver isn’t currently priced for this dynamic.

In fact, silver is significantly undervalued compared to gold. The current gold-silver ratio is just over 88-1. That means it takes over 88 ounces of silver to buy an ounce of gold.

To put that into perspective, the average in the modern era has been between 40:1 and 60:1. Historically, the ratio has always returned to that mean. And when it does, it does it with a vengeance. The ratio fell to 30-1 in 2011 and below 20-1 in 1979.

Given the current silver price, the silver-gold ratio, and the supply and demand dynamics, silver appears to be on sale.

Money Metals Exchange and its staff do not act as personal investment advisors for any specific individual. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. Readers and customers should be aware that, although our track record is excellent, investment markets have inherent risks and there can be no guarantee of future profits. Likewise, our past performance does not assure the same future. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing through Money Metals, you understand our company not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. This Website is provided “as is,” and Money Metals disclaims all warranties (express or implied) and any and all responsibility or liability for the accuracy, legality, reliability, or availability of any content on the Website.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD struggles to make it through 0.6300 amid mixed cues

AUD/USD struggles to make it through 0.6300 amid mixed cues

AUD/USD remains confined in a familiar range below the 0.6300 mark and close to over a two-week high touched ahead of the US CPI on Wednesday. A positive risk tone supports the Aussie amid subdued USD demand, despite diminishing odds for further easing by the Fed. 

AUD/USD News
EUR/USD regains some ground, but remains hobbled by key technicals

EUR/USD regains some ground, but remains hobbled by key technicals

EUR/USD churned on Wednesday, testing the low end through most of the intraday session before breaking higher after investors tried to shake up an unexpected upswing in US Consumer Price Index inflation. 

EUR/USD News
Gold picks up pace above $2,900, Dollar weakens further

Gold picks up pace above $2,900, Dollar weakens further

Extra selling bias in the Greenback now prompts Gold prices to regain the $2,900 mark per ounce troy and above despite the steady climb in US yields across the board.

Gold News
Bitcoin and crypto recovers from CPI data as Trump pushes Russia–Ukraine diplomacy

Bitcoin and crypto recovers from CPI data as Trump pushes Russia–Ukraine diplomacy

Bitcoin and the crypto market saw slight gains on Wednesday after President Donald Trump's resolution calls with Russian President Vladimir Putin and Ukraine's President Volodymyr Zelenskyy. 

Read more
How the European Union could counter US tariffs

How the European Union could counter US tariffs

With Trump ordering a 25% import tax on all steel and aluminium entering the US, trade tensions are inching closer to Europe. We take a closer look at how European policymakers could react. Spoiler alert: it's complicated.

Read more
The Best Brokers of the Year

The Best Brokers of the Year

SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025