Silver jumped over 5% to above US$108 ($156) an ounce on 26 January, extending a historical rally to all-time highs on strong safe-haven and investment demand.
Trading Economics reports that rising prices have spurred robust retail demand in key markets such as China and India, with investors increasingly turning to 1kg silver bars. Chinese manufacturers have also shifted production from silver jewellery to investment products to meet the surge in demand.
Rick Kanda, Managing Director of The Gold Bullion, says similar to gold, investing in silver bars and coins can serve as an inflation hedge, as well as a portfolio diversifier.
“The main difference between the two is that silver comes with higher volatility than gold, as there is a much higher industrial demand, a smaller market size, and in the UK is subject to 20% VAT,” Kanda says.
“Factors like economic uncertainty and industrial demand cause silver prices to fluctuate constantly; however, silver is much more affordable than gold, making it within reach for smaller investors.”
According to Kotak Mutual Fund, although silver demand is rising, the world is unable to produce enough to match it – creating a supply squeeze that is forecast to continue throughout the years.
Silver’s drivers
Mexico is the top silver producer in the world, accounting for 6,000 tonnes in 2025. Peru is the second largest silver producer accounting for 4,200 tonnes, while China produced 3,500 tonnes.
In 2025, the global silver shortfall was estimated at around 230 million ounces, driven by soaring industrial needs. These industrial needs include solar energy, electronics, aerospace and brazing alloys, alongside jewellery demand.
Solar energy has been the biggest incremental driver of silver’s demand over the past decade. Kotak Mutual Fund reports that global installations reached around 655 gigawatts in 2025, growing about 10% year-on-year.
As previously reported, silver reached US$94 an ounce early last week, following US President Trump threatening to impose new tariffs on eight European nations in a bid to gain control of Greenland.
Over the past month, silver’s price increased 51.62% and is up 262.54% compared to the same time last year.
Kanda says the price of silver rose “massively” throughout 2025, ending the year with a near 150% gain.
“This rise was driven by a combination of severe supply shortages, surging industrial demand, and geopolitical uncertainty, which has continued into 2026, driving the price of silver to remarkable highs so far this year,” he adds.
“Tensions currently driving a strong demand for precious metals are due to the conflict between the US and Venezuela, as well as the Greenland dispute between the US and Europe.”
Write to Aaliyah Rogan at Mining.com.au
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