Silver: 2025 Outlook and Beyond

Silver has entered 2025 with a promising setup, driven by a strong mix of industrial demand, tightening supply dynamics, and favorable macroeconomic trends. After a relatively slow start compared to gold, silver’s performance is now expected to accelerate in the second half of 2025, fueled by an improving industrial outlook, particularly in green technologies such as solar energy and electric vehicles. Current spot prices hover around $29–30 per ounce, reflecting an 11% rise year-to-date. Furthermore, the gold-to-silver ratio has expanded to above 100 — historically considered very high — suggesting silver remains significantly undervalued relative to gold.

The supply-demand balance is firmly tilted in favour of higher silver prices. According to the Silver Institute, the global silver market will record a substantial deficit of 149 million ounces in 2025. While total silver supply is forecasted to rise by a modest 3%, this increase is insufficient to bridge the widening gap between robust industrial demand and available supplies. Importantly, more than 56% of silver’s usage is now attributed to industrial applications, with the photovoltaics (solar panels) sector expected to consume record levels of silver this year. Electric vehicles, which use approximately double the amount of silver compared to conventional internal combustion engine vehicles, are also becoming a major driver of demand growth.

On the macroeconomic front, silver is set to benefit from a supportive environment. The U.S. Federal Reserve is expected to initiate rate cuts later in 2025 as economic pressures mount, including risks of a mild recession, particularly due to the U.S.-China trade tensions. Inflation is forecasted to stabilize around 2.75% to 3%, preserving precious metals’ attractiveness as a hedge against currency debasement. Moreover, the probability of a global recession remains elevated at around 60%, reinforcing the safe-haven appeal of precious metals like silver.

Price forecasts across major institutions are notably bullish. J.P. Morgan projects silver prices to rise sharply towards $39 per ounce by the end of 2025, with a full-year average of around $35 per ounce. Analysts are even more optimistic, forecasting a potential rally toward $39-$50 per ounce as demand from green sectors strengthens, persistent supply deficits and stronger industrial fundamentals. Across the board, the consensus points to a major catch-up rally for silver beginning more forcefully in the second half of the year.

Additionally, as interest rates decline and inflation expectations stabilize, silver ETFs, which have seen tepid flows so far, are expected to see renewed inflows, further supporting prices.

However, certain risks must be acknowledged. Industrial activity, particularly in China, remains a sensitive point. If economic growth in China continues to slow, or if the solar sector faces regulatory or funding challenges, silver’s near-term demand could be softer than expected. A persistently strong U.S. dollar could also temporarily weigh on silver prices, as silver is priced in dollars and becomes more expensive for foreign investors.

In conclusion, the outlook for silver in 2025 is highly constructive, particularly from mid-year onward. While short-term volatility is expected due to macroeconomic uncertainties, the long-term fundamentals of silver remain deeply supportive. Persistent supply deficits, a booming green technology sector, and a shifting macro environment characterized by lower interest rates and sustained inflation will likely propel silver prices significantly higher. Conservative forecasts see silver reaching around $39/oz by year-end 2025, while more aggressive scenarios envision silver testing $45–$50/oz by early 2026. For long-term investors, silver offers an attractive risk-reward profile with strong upside potential over the next 12 to 24 months.

US Impact of the Current U.S. Scenario on Silver: Short-Term and Long-Term Analysis

In the immediate future, silver is facing some headwinds from the strength of the U.S. dollar and ongoing industrial demand uncertainty. However, looking further ahead, the backdrop of expected Fed rate cuts, trade wars, inflation risks, and fiscal instability create a very bullish long-term setup for silver.

However, the long-term outlook for silver (12–24 months and beyond) is overwhelmingly bullish because of profound shifts in U.S. monetary and fiscal dynamics. First, the Federal Reserve is widely expected to begin cutting interest rates by September 2025, with multiple cuts projected through 2026 to combat recession risks. Lower interest rates reduce the opportunity cost of holding non-yielding assets like silver, typically leading to higher silver prices. Second, U.S. fiscal policy is becoming increasingly expansionary. The recently passed U.S. budget is expected to add up to $5.8 trillion to deficits by 2034, according to the Committee for a Responsible Federal Budget (CRFB). This massive debt increase raises significant concerns about currency debasement and inflation, making hard assets like silver highly attractive as stores of value.

In conclusion, while the short-term U.S. scenario poses some risks to silver, mainly from dollar strength and industrial slowdown, the long-term U.S. economic reality — characterized by high fiscal deficits, expected monetary easing, trade-driven inflation, and weakening confidence in traditional safe-haven assets — is extremely bullish for silver. Investors should brace for some near-term volatility but recognize the tremendous upside silver offers in the context of the unfolding U.S. macroeconomic landscape.

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Prepared by Anand Gorasiya, Finance Intern at FInvesTree