Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
The silver market is facing steep shortages heading into 2025, according to a joint forecast by the Silver Institute and Metal Floss*. The shiny metal is experiencing an explosive combination of surging demand and stagnant supply, a trend expected to continue next year. Despite the post-election pullback, experts expect silver prices to benefit from this market tension in the long run.
The Supply Side
The supply side of the silver market has remained relatively unchanged for over a decade. In 2024, the silver supply is estimated to grow by a measly 2% to 1.03 billion ounces. For context, the silver supply was 1.07 billion ounces in 2010. That’s nearly a 4% drop over 14 years.
Source: Statista
Why is supply stagnant?
A number of hurdles prevent the silver supply from overcoming steady demand increases. First and foremost, silver is a byproduct of mining other metals such as copper and zinc which severely limits output. Another challenge is the dearth of high-quality and cost-effective ore deposits. The most valuable and economical mines have already been tapped. Throw strict environmental and governmental regulations into the mix and expanding supply becomes extremely challenging.
The Demand Side
While the silver supply struggles to grow, demand for the shiny metal is breaking new records. By the end of 2024, total silver consumption is expected to hit 1.21 billion—the second-highest amount ever. The resulting 182 million ounce deficit might not seem like a lot, but it marks the fourth consecutive year of considerable shortages. This alarming trend indicates a structural imbalance that could have consequences for the silver market for years to come.
Why is demand growing?
Industrial Demand – A steady increase in industrial usage is the primary driver behind this booming demand. Silver’s relative affordability and unique properties make it a crucial component for various electrical applications. This year, industrial demand is on pace for 7% growth. As a major contributor to electric vehicles, solar panels, and other sustainable technologies, silver is expected to see outsized demand from the renewable energy sector in the future. Solar energy alone could account for nearly 100% of the silver supply by 2050.
Investment Demand – Experts also point to rising interest from central banks as a boon to silver momentum. Although gold is the staple reserve metal, some countries have been looking to diversify. Recently, Russia announced plans to expand its precious metals holding with silver to the tune of $535 million over the next three years. Although retail demand for silver assets plunged 15% in 2024, experts project this number will tick up in the face of uncertain economic conditions.
Silver’s Shiny Rally
The balance between supply and demand is one of the major factors influencing silver prices. The tension caused by low availability and record-setting consumption has acted as a huge tailwind for silver, fueling the metal’s impressive growth in 2024. From trough to peak, silver prices soared over 57%, making it one of the highest-performing assets of the year. This relentless surge comes as gold and the stock market notch their own records.
What’s the outlook for silver prices?
The steep disparity between dwindling supply and booming demand results in a bullish outlook for silver prices. Many major financial institutions and experts are calling for upward growth in 2025 and beyond. A panel of precious metals professionals at the London Bullion Market Association (LBMA) predicted silver to reach $45, representing more than a 45% jump.