Silver Surges to Record High in Best Year Since 1979
Prices top $55 an ounce as a structural supply deficit, robust industrial demand, and strong investor inflows fuel a 95% rally this year.
Silver prices surged to an all-time high on Friday, with the precious metal climbing over 5% in morning trading to extend a historic rally that has seen its value skyrocket 95% in 2025. The move marks silver's best annual performance since 1979, driven by a potent combination of a severe physical supply shortage and soaring demand from both industrial users and investors.
The spot price for silver topped $55 per troy ounce, reflecting mounting concerns over a structural deficit in the global market. The rally has provided a significant lift to the entire precious metals complex, with silver-backed exchange-traded funds (ETFs) and mining equities experiencing substantial gains. The iShares Silver Trust (SLV), the largest silver ETF, has gained approximately 75% year-to-date, attracting significant investor inflows as a direct proxy for the metal's performance.
Driving the surge is a market imbalance that has been building for years. The market is facing its seventh consecutive annual supply deficit, according to data from The Silver Institute, with demand consistently outpacing new production from mining and recycling. This year, the shortfall has become particularly acute, creating a rush for physical supply.
"We are seeing a classic supply squeeze amplified by very strong underlying demand fundamentals," noted an analyst at a major commodities trading firm. "The market has been tight for some time, but the momentum has shifted into a higher gear."
Industrial consumption, which accounts for more than half of all silver demand, has been a primary catalyst. The global transition to green energy has accelerated the need for silver in solar panels and electric vehicles. Simultaneously, its critical role in 5G telecommunications infrastructure and advanced electronics for AI applications has added another layer of inelastic demand.
The rally's impact is clearly visible in the equity markets. Shares of major silver producers have soared, capitalizing on the higher price environment. Hecla Mining (HL) has seen a remarkable year-to-date return of over 200%, while Pan American Silver (PAAS) stock is up more than 7% this week, hitting a new 52-week high after reporting record free cash flow in its latest quarter.
Alongside industrial use, investment demand has been robust. With persistent geopolitical uncertainty and expectations of a softer U.S. dollar, investors have turned to silver not only as an industrial commodity but also as a store of value and a hedge against inflation. This dual identity has helped it outperform gold significantly this year, narrowing the historically wide gold-to-silver ratio.
As the year draws to a close, market participants are watching closely to see if mining output can respond to the powerful price signal. However, with long lead times for new projects and relatively flat production forecasts, the supply-demand imbalance that has defined silver's blockbuster year appears set to continue into 2026.