Silver has surged to $40.7 per ounce, closing at a multi-year high and taking the lead as the best-performing major asset in 2025. The yearly gain of 40% is ahead of other precious metals, except for platinum, which has a significantly smaller market.
The factors contributing to the outstanding rally include the growing likelihood of a Federal Reserve interest rate cut in the next meeting, supply constraints in physical markets, and heightened political instability in Europe.
Investors see the odds of a 25-basis-point reduction in September at nearly 90%, according to CME Group’s FedWatch tool. Lower borrowing costs tend to enhance demand for non-yielding assets such as silver and gold.
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Colin Fenton, strategist at 22V Research, predicts the metal will reach $43 by the end of 2025 and assigns a 27% probability of surpassing its all-time nominal high of nearly $50 within the year. “Those odds double by the second half of 2026,” he said.
Beyond speculative positioning, new research commissioned by the Silver Institute sheds light on the global structure of silver demand. Metals Focus, the consultancy that prepared the report, examined physical investment markets in India, Germany, the United Kingdom, the United States, and other countries.
India remains a demand driver through jewelry and investment consumption, while Germany and other European markets have adopted silver as a hedge against inflation.
However, the study highlights the distinctive role the U.S. plays in the silver trade. Large-scale purchases of minted products, particularly coins and bars from the U.S. Mint, dominate both retail and institutional flows. A crucial factor is the absence of value-added taxes on bullion, unlike in many European countries, making silver investment comparatively more efficient in the U.S. market.
Still, the analysts note the impact of the political shift within the U.S. on physical silver demand.
“Many dealers feel that a good number of investors in precious metals tend to be Republican-leaning and so expectations of a ‘better’ management of the U.S. under President Donald Trump’s second administration also curtailed demand,” they wrote.
That said, the study expects the retail investment to decline further this year, to a multi-decade low of 45.9 million ounces, mirroring the quiet period between 2017 and 2019 when net demand fell to around 50 million ounces.
Experts believe the current environment has positives for both sides of the curve. Short-term speculators are encouraged to take some profits after a big rally, while the trend followers might continue buying, targeting a 2011-like blow-off rally.
Price Watch: iShares Silver Trust (NYSE:SLV) is up 34.4% year-to-date.
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