Silver Rally Far From Over: Expert Sees More Upside Amid Industrial Boom and Supply Crunch
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By Lavanya Singla
Chandigarh: Silver prices are on an upward trajectory in 2025, driven by a powerful convergence of strong industrial demand, persistent supply constraints, and macroeconomic tailwinds. According to Satish Dondapati, Vice President and Fund Manager at Kotak Asset Management Company (AMC), the rally in silver is far from peaking. He believes the metal still has significant room to appreciate further, especially as clean energy technologies and next-gen electronics accelerate consumption.
“Silver’s rally is not just a speculative move or a reaction to gold. There are deep structural changes taking place in the global economy that are pushing silver into a new demand phase,” Dondapati explained in an interview. “The biggest triggers right now are robust industrial consumption and tightening mine supply, with geopolitical factors adding further pressure.”
Gold-Silver Ratio Signals Silver’s Growing Strength
One of the more telling indicators of silver’s relative performance is the gold-silver ratio — the number of ounces of silver it takes to purchase one ounce of gold. This ratio, which exceeded 100 in recent years, has now declined to around 93. Historically, this ratio has averaged closer to 60, implying that silver may still be undervalued relative to gold.
“If gold remains around the $3,400 mark and the ratio narrows back to 80, we could see silver trading at $42.50 per ounce. If it compresses to 70, that puts silver near $48.57. A return to the long-term average of 60 would push silver even higher — into the $56–$57 range,” Dondapati said.
Industrial Demand Now Dominates
While silver is often viewed through the lens of a precious metal and safe-haven asset, its industrial role is increasingly taking center stage. Over 50% of global silver demand now comes from industrial applications, up significantly from a decade ago when jewelry and silverware dominated consumption.
“Today, silver is an essential metal in several fast-growing industries. For example, each solar panel uses about 15 to 20 grams of silver. With solar installations expected to rise globally by over 20% this year, the demand from the renewables sector alone is enormous,” said Dondapati.
Silver’s usage extends beyond solar energy. It plays a crucial role in the electrification of transportation. In electric vehicles (EVs), silver is used extensively in batteries, power electronics, charging infrastructure, and in sensors for autonomous systems. A typical EV uses up to twice as much silver as an internal combustion engine vehicle.
“Then there’s the rapid growth of artificial intelligence and 5G technologies. These require high-performance electronics with superior conductivity and thermal resistance — where silver remains unmatched. From data centers to AI chips, silver is becoming irreplaceable,” Dondapati emphasized.
Supply Challenges Persist
While demand continues to soar, silver supply is struggling to keep pace. The global silver market is expected to post a deficit for the fifth consecutive year in 2025, with the Silver Institute forecasting a shortfall of around 149 million ounces.
“Silver is primarily mined as a by-product of other metals like lead, zinc, and copper. That makes it vulnerable to disruptions in those industries,” Dondapati explained. “We’re also seeing falling ore grades, aging mines, and reduced capital expenditure in new exploration, particularly in key producing countries like Mexico, Peru, and China.”
Adding to the strain are global geopolitical tensions and shifting trade policies. Export restrictions, labor disputes, and new environmental regulations have begun to affect the flow of silver across borders. Moreover, with mining becoming more expensive and energy-intensive, especially under stricter ESG mandates, production costs are also rising.
Investment Demand Strengthens
In addition to industrial consumption, investment demand for silver is also on the rise. The relatively lower price point of silver compared to gold makes it an attractive asset for retail investors, especially among the younger demographic.
“Silver is increasingly being bought through digital investment platforms and exchange-traded funds (ETFs). Millennials and Gen Z investors see silver as an affordable and tangible hedge against inflation, currency debasement, and geopolitical uncertainty,” said Dondapati. “Its accessibility makes it especially appealing in markets like India and Southeast Asia, where retail investors are seeking alternatives to traditional assets.”
Recent reports also indicate strong inflows into silver ETFs and physical silver bars and coins. In countries like India, silver imports have surged over 40% year-on-year, signaling growing interest from both institutional and retail segments.
Macroeconomic Support for Higher Prices
Dondapati believes broader macroeconomic factors are creating a supportive backdrop for silver prices. A weakening U.S. dollar, persistent inflationary pressures, and dovish central bank policies are creating a favorable environment for commodities.
“Historically, silver performs well during periods of monetary easing and currency weakness. If the U.S. Federal Reserve begins cutting interest rates, as some expect later this year, that would further boost silver’s appeal,” he noted. “Inflation may have cooled in some markets, but structural inflation driven by energy transition and supply chain localization will keep hard assets like silver in favor.”
Risks and Volatility Remain
Despite the optimistic outlook, Dondapati cautioned that silver is not without its risks. Price volatility remains high, and the metal has a history of sharp corrections.
“Silver tends to overreact in both directions. It’s much more volatile than gold. Investors should be aware that while the long-term fundamentals are strong, there will be periods of pullbacks,” he said.
Interest rate dynamics are another risk factor. If inflation proves stickier than expected and central banks are forced to raise rates again, that could dampen the momentum in silver and other commodities. Additionally, any sudden rebound in silver mine production or unexpected drop in industrial consumption — especially in China or the U.S. — could put pressure on prices.
Long-Term Outlook Remains Bullish
Despite short-term uncertainties, the long-term case for silver remains intact. Analysts across the industry are projecting strong multi-year gains, driven by energy transition goals, digitalization, and supply-side constraints.
“Silver sits at the intersection of the old and new economy. It retains its value as a store of wealth while being increasingly indispensable to future technologies,” Dondapati concluded. “That dual nature is what gives silver its edge. In my view, this rally has more legs and will likely evolve into a broader structural uptrend over the next few years.”
With growing institutional interest, rising strategic demand, and constrained supplies, silver is poised to shine not just in 2025 but well into the future.
