The global silver market is on track to record its fifth consecutive structural deficit in 2025, with tightening supply, surging investor demand and record prices underscoring one of the most volatile years the metal has seen in more than a decade.

Presenting at the Silver Institute’s yearly industry dinner in New York this week, Metals Focus MD Philip Newman and director of mine supply Sarah Tomlinson outlined a market shaped by liquidity stress, geopolitical uncertainty and an increasingly bullish investor base.

Silver has gained 67% year-to-date to November 6 – outperforming gold, which rose 52%, and the S&P 500, up 14%. Prices reached an all-time high of $54.48/oz in October, fuelled by record lease rates, unprecedented deliveries into CME vaults amid US tariff concerns and the US government’s recent designation of silver as a critical mineral. Even after a sharp correction, the metal has largely held above $47/oz.

Despite the price rally, global silver demand is forecast to drop 4% this year to 1.12-billion ounces, with all key segments – industrial, jewellery, bar and coin – expected to contract. Industrial demand will ease 2% to 665-million ounces, weighed down by economic uncertainty and faster thrifting in photovoltaics, where silver loadings continue to fall despite record new solar installations. Jewellery and silverware demand will decline, reflecting weaker buying in India following record-high local prices.

Investment demand, however, is more than offsetting these declines. Exchange-traded product (ETP) holdings have jumped 18%, absorbing 187-million ounces so far this year – the strongest inflow since 2020. Concerns around stagflation, Federal Reserve independence, US fiscal sustainability and rising geopolitical risk have driven investors toward precious metals. Nearly half of ETP metal is held in London, contributing to October’s liquidity squeeze.

On the supply side, global mined output is expected to remain flat at 813-million ounces in 2025. Production gains in Mexico – supported by the restart of Peñoles’ Tizapa mine and ramp-up of Endeavour Silver’s Terronera project – along with higher Russian volumes will offset declines from Peru and Indonesia. Recycling supply will edge up 1%, driven mainly by increased silverware scrapping in Western markets.

Metals Focus estimates the 2025 deficit at 95-million ounces – smaller than last year’s but still significant. Over the five-year period from 2021 to 2025, cumulative structural deficits will have reached nearly 820-million ounces, helping to explain the persistent tightness in the physical market.