Silver Demand Surges as ETFs Add Nearly 590 Tons Amid Supply Deficit
Prices for the precious metal test all-time highs as a fifth consecutive year of a structural supply deficit puts a strain on available inventories.
Investors are making a significant move into silver, fueling a rally that is pushing prices toward historic highs amid growing concerns over a persistent supply shortage.
Silver-backed exchange-traded funds (ETFs) recorded their largest inflows since July, adding nearly 590 tons of the metal last week alone. This surge in investment demand coincides with silver prices touching a new all-time high of $56.57 per ounce in trading last month, reflecting a potent combination of safe-haven buying and robust industrial consumption.
The renewed investor appetite comes as the silver market is grappling with what the Silver Institute projects to be its fifth consecutive structural deficit in 2025. The market is expected to face a supply shortfall of 95 million ounces this year, contributing to a cumulative deficit of nearly 820 million ounces since 2021. This long-term imbalance is straining global inventories and providing a strong fundamental tailwind for prices.
Unlike gold, silver's value is driven by dual streams of demand: investment and industry. While investors often turn to silver as an inflation hedge and a store of value, its industrial applications are becoming an increasingly critical part of its narrative. Industrial fabrication is forecast to grow by 3% in 2025, potentially exceeding 700 million ounces for the first time. This growth is largely propelled by the green energy transition, with significant demand coming from photovoltaic cells for solar panels, electronics manufacturing, and the production of electric vehicles.
This dynamic of soaring demand against a backdrop of constrained supply has caught the attention of institutional investors. The recent inflows into ETFs signal a belief that silver may have more room to run. Holdings in silver-backed ETPs had already grown substantially this year, adding a net of approximately 187 million ounces by early November, according to market analysis.
Wall Street analysts are taking note of the bullish fundamentals. Bank of America recently raised its 12-month price target for silver to $65 per ounce, suggesting significant upside from current levels. As the global economy continues to navigate inflationary pressures and the push for decarbonization accelerates, the unique dual-role of silver as both a monetary and industrial metal places it at a compelling crossroads for investors.