In 2025, precious metals massively outperformed equities. While gold gained more than 75 per cent, it was silver that outshined everything else, surging more than 170 per cent, and the rally has continued unabated in 2026. Continued geopolitical tensions and trade-related uncertainties, fuelled by the US administration’s levy of steep tariffs on imports from many countries, led to strong investor demand for precious metals. However, silver’s performance was boosted by dual tailwinds. First, the rising investment appetite amid global uncertainties, and second, industrial use cases driving demand.
These factors drove silver prices from around $29 an ounce at the start of 2025 to more than $80 at the end of the year. On January 12, 2026, silver hit a new all-time high of $84.50. In the domestic market, it went up to Rs2.63 lakh per kilo before retreating to around Rs2.62 lakh. At the start of 2025, it was priced at Rs93,500. Demand for silver has been rising over the past few years as it is used in solar panels, electric vehicles, semiconductors and data centres, among other areas. However, silver supply has not kept pace with this increasing demand.
Silver demand rose by around 24 per cent, from 929 million ounces in 2020 to an estimated 1,148 million ounces in 2025, according to The Silver Institute. In contrast, silver supply during the same period rose by only around 6 per cent, from 974 million ounces to an estimated 1,031 million ounces. Starting this year, China announced tighter control over silver exports, which further drove prices up. China has not imposed a blanket ban on the export of silver; but, under tighter controls, only 44 companies are allowed to export silver in 2026 and 2027. This is one of several measures China has taken over the past two years to curb exports of minerals it deems critical for its industries.
The structural supply tightness underpinned the silver rally, with global silver demand exceeding supply for the fifth consecutive year, said analysts at Motilal Oswal Financial Services. Industrial demand was the second highest on record, driven by solar photovoltaics, electrification, electric vehicles, grid infrastructure and emerging technology applications. James Steel, chief precious metals analyst at HSBC, said that silver prices were “fundamentally overvalued”. He expected demand conditions to remain volatile “with likely upside spikes until near-term tightness is alleviated”. HSBC’s average price forecast for 2026 stands at $68.25, falling to $57 in 2027.
Exchange-traded funds (ETFs) are accumulating at a robust pace and may continue to do so, feels Steel. But, “industrial demand is weakening as price-related resistance lowers purchases,” he noted. He also pointed to rising recycling levels, as high prices, as well as greater electronic, environmental and other recovery efforts boost supply.
The supply and demand mismatch drove up prices, which in turn fuelled investment demand for silver. In the domestic market, the combined assets under management of gold and silver ETFs topped Rs2 lakh crore in December, up from around Rs57,000 crore at the beginning of 2025. Those who had invested at the start of the year would now be sitting on massive gains. However, it may not be wise to think that silver will continue to go up and deliver similar astronomical returns going ahead.
Historically, there have been several instances where silver rallies have been followed by a crash. In fact, silver made hardly any gains for years. It surged to around $40 an ounce in 1980 but then slumped back to $10. Silver topped $50 an ounce in 2011, but that rally, too, fizzled out. It was only in 2025 that it crossed those levels again. One must ask: is this time different, considering the strong industrial use cases driving demand?
According to Motilal Oswal, gold and silver are expected to retain their strategic relevance in early 2026, supported by continued investor demand, limited mine supply growth and relatively inelastic scrap flows. The continued physical market tightness will then continue to reinforce the role of precious metals in long-term investor portfolios. “Commodities are transitioning from momentum-driven trades to strategically allocated assets. While volatility is likely to remain a feature of the market, structural demand, currency dynamics and policy uncertainty continue to reinforce the role of commodities—particularly precious metals—as core portfolio hedges in an increasingly fragmented global macro environment,” said Navneet Damani, head of research, commodities, at Motilal Oswal.
Private wealth management firm Client Associates is advising clients against taking fresh positions on silver at current levels, noting that the “risk-reward balance is presently unfavourable.” While analysts generally remain positive on silver’s long-term demand trends, consolidation in the near term could very well be possible given the magnitude of the rally.
According to fund managers at Tata Mutual Fund, while the strong demand outlook and supply worries are supporting fundamentals for silver’s bullish trend, they believe “profit booking, portfolio rebalancing and revision in demand supply figures” could trigger price correction. “At current levels, investors may remain cautious with the fresh investment and may look to invest in silver through staggered mode considering the volatile nature of the commodity,” they said.
In 2026, the metal’s trajectory will likely depend on whether the industrial “super-cycle” can provide a high enough floor to prevent the historical boom-and-bust patterns of the past. For now, silver remains the focal point of the commodities world, balancing on a fine line between genuine scarcity and speculative fever.