Silver’s Historic Rally Redefines Its Role in Global Markets
Silver has emerged as one of the standout performers in global commodities, decisively outpacing gold and reshaping investor perceptions of the white metal. On India’s Multi Commodity Exchange (MCX), silver futures have surged an extraordinary 167 percent year-to-date, climbing from Rs 95,400 on December 31, 2024, to Rs 2,54,100 by December 29, 2025. In international markets, spot silver prices jumped from just above $29 to around $83 per ounce over the same period.
This sharp rise has propelled silver into the ranks of the world’s most valued assets, trailing only gold and technology giant NVIDIA in valuation terms. While gold delivered solid returns of a little over 75 percent in 2025, silver’s performance has been nearly double, underscoring a powerful shift in investor preference.
“Silver is no longer just a cyclical commodity,” said Renisha Chainani, Head of Research at Augmont. “It is increasingly being treated as a strategic metal, driven by both macroeconomic forces and structural industrial demand.”
Dual Identity as Monetary and Industrial Metal Drives Demand
At the heart of silver’s rally is its unique dual role. Unlike gold, which is primarily a monetary hedge, silver straddles both investment demand and industrial consumption. This combination has amplified its upside during a period marked by easing monetary policy, geopolitical uncertainty, and accelerating energy transition investments.
Central banks lowering interest rates—particularly the US Federal Reserve—have reduced real yields, making non-yielding assets like silver more attractive. At the same time, expanding use of silver in solar panels, electric vehicles, electronics, and defence applications has created sustained physical demand.
“Silver’s 2025 rally is being shaped by real metal scarcity rather than speculative positioning,” said Navneet Damani, Head of Research (Commodities) at Motilal Oswal Financial Services. “Physical deficits and policy-driven supply constraints are increasingly dictating prices.”
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Economic Trends Likely to Shape Silver Prices in 2026
Market experts believe several macroeconomic trends will continue to influence silver in 2026, potentially extending its leadership over gold.
Key trends investors should watch include:
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Global energy transition: Solar power, EV adoption, and grid expansion are expected to keep industrial demand structurally strong.
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Slower global growth with easier monetary policy: This environment typically compresses real interest rates, benefiting precious metals.
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De-globalisation and trade restrictions: Export controls and critical-mineral policies, especially involving China and the US, could disrupt supply chains.
These forces are transforming silver from a short-term trading asset into a medium- to long-term portfolio component.
Central Bank Policies Could Amplify Silver’s Volatility
Interest rate decisions by global central banks will remain a critical driver. Silver, being a non-yielding asset with high beta, tends to outperform during easing cycles. Additional rate cuts or liquidity injections could attract speculative and ETF inflows, pushing prices higher.
Chainani noted that while gold benefits more directly from central bank reserve buying, silver often outperforms during monetary easing phases. “Monetary support amplifies both silver’s investment appeal and its industrial demand,” she said.
However, this sensitivity also makes silver more volatile, requiring investors to balance opportunity with risk.
Silver Versus Gold: Higher Risk, Higher Reward in 2026
Most analysts expect silver to outperform gold in percentage terms in 2026, albeit with sharper price swings. Gold is likely to retain its role as a stable hedge against currency debasement, debt, and geopolitical stress. Silver, by contrast, benefits from a “dual engine” of monetary tailwinds and industrial growth.
“Historically, in late-cycle easing phases after strong gold rallies, silver tends to play catch-up aggressively,” Chainani explained. “That makes it the higher-risk, higher-reward metal.”
Structural supply deficits and policy-driven constraints further strengthen silver’s case relative to gold.
Global Tensions and China’s Role Add Structural Pressure
Geopolitical uncertainty is another key factor. Damani believes the silver market has entered a structural phase marked by prolonged physical deficits and inventory depletion. A widening gap between paper prices and physical availability highlights stress in global price discovery.
China’s evolving role is particularly significant. As one of the world’s largest refiners and net importers of silver, China saw physical inventories fall to decade lows in 2025. Proposed export licensing requirements from January 1, 2026, could further tighten global supply.
“Unlike gold, silver reacts not just to fear but also to policy responses such as stimulus, defence spending, and energy security,” Chainani said, making it highly sensitive to prolonged global uncertainty.
Price Outlook and Strategy for Investors in 2026
Analysts expect silver prices to trade in a broad range of $65 to $80 per ounce in 2026. Upside risks could push prices toward $95–$100 if deficits persist and monetary easing accelerates, while downside appears limited near $55–$60 due to strong structural demand.
Experts advise against chasing sharp rallies. Instead:
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Adopt a staggered, SIP-style accumulation strategy
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Use corrections to build exposure
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Treat silver as a medium- to long-term strategic allocation
Silver’s supply dynamics add to its price sensitivity. Nearly 70 percent of global silver output is produced as a by-product of other metals, making supply slow to respond to rising prices.
“This inelastic supply makes silver particularly vulnerable to sharp price spikes during demand surges,” Chainani noted.
