International silver prices have clocked a 10 percent rise over the past month, powered by a safe-haven demand as well as rising industrial demand, at a time when the supply has been constricted in recent years.
Silver, despite commanding safe-haven demand, does not always move in tandem with gold, as industrial demand – from sectors like electric vehicle, solar power, renewables and healthcare - often drives prices. The ongoing trade negotiations between the US and China has spurred the silver rally, even as gold underperformed over the past one month.
Bhavik Patel, senior commodities analyst at Tradebulls Securities said any progress in trade talks between US and its trading partners should help reduce tariffs, increasing the demand for silver as an industrial metal.
A weaker dollar has made silver more affordable, and anticipated delays in US Federal Reserve’s rate hikes are further encouraging investors to turn to precious metals, said Aamir Makda, commodity and currency analyst, Choice Broking.
The global silver market has been in a structural deficit for the last four years. The World Silver Survey 2025 said mine output has seen a significant 7.23 percent drop from 2014 levels at 835 million ounces. This declining supply starkly contrasts with the rising industrial demand for silver, said the Choice Broking analyst.
Silver still Undervalued Versus Gold?
Makda said that on a historical basis, the gold-to-silver ratio has hovered near 65:1, representing how many ounces of silver it would take to buy one ounce of gold. Simply put, as gold prices skyrocket while silver prices underperform, it would take more silver to buy the same amount of gold.
As of June 2025, the ratio has fluctuated around 90-100:1 after falling from an earlier 2025 peak of 105:1, suggesting that silver is still undervalued as compared to gold. However, the bullish trend in the yellow metal has outperformed its silver over the past three months and the year so far.
Risk to the Rally
Any slowdown in global growth is likely to pause the bull run in silver, as the demand from manufacturers could take a beating. Historically, any rise in silver prices has been closely linked to global economic growth. According to the World Bank, global growth is likely to see a slowdown, with the global financial institution trimming its growth outlook by 40 bps to 2.3 percent for 2025.
Therefore, any substantial global economic downturn or even partial recession would directly impact the industrial demand for silver, while a prolonged slowdown in Chinese manufacturing or a major policy shift by Beijing could dent the global industrial demand. “…a de-escalation of significant geopolitical conflicts might reduce safe-haven demand for silver. These factors could all cap silver's rally,” said Aamir Makda.
Time to Invest in Silver?
“Silver’s volatility, sensitivity to industrial demand, and potential policy surprises mean investors should tread carefully, stagger entries, and watch macro trends closely,” said Jigar Trivedi, Senior Commodities Analyst, Reliance Securities.
Tradebulls’ Bhavik Patel said the risk of profit booking always looms large after periods of sharp rallies, therefore, investors interested in silver should bet via ETFs and through the SIP route, which could help them average down their purchase prices, in case of any drop in silver prices.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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