Silver has emerged as the standout performer in the precious metals complex during the first quarter, outpacing gold with gains exceeding 25% year-to-date. The white metal’s dual role as both a monetary metal and industrial commodity has positioned it uniquely in the current market environment.
The Silver Squeeze Continues
Physical silver demand has been extraordinary, with the Silver Institute reporting record investment demand for the third consecutive year. Retail investors have been particularly active, drawn by silver’s relative affordability compared to gold and its perceived undervaluation based on the gold-to-silver ratio.
The gold-to-silver ratio currently sits near 89:1, well above its historical average of approximately 60:1. Many precious metals analysts argue that this ratio suggests silver has significant room to catch up to gold’s performance.
Industrial Demand Tailwinds
Silver’s industrial applications continue to grow, particularly in the solar energy sector. Photovoltaic cell production consumed over 140 million ounces of silver last year, and demand is projected to grow 15-20% annually as global solar installations accelerate.
Electric vehicle production is another growing source of silver demand, with each EV containing approximately 25-50 grams of silver in various electronic components, connectors, and battery contacts.
Supply Constraints
On the supply side, primary silver mine production has been flat to declining for several years. Many of the world’s largest silver mines are aging, and new mine development has been hampered by rising costs, permitting delays, and ESG considerations.
This structural supply deficit, combined with rising industrial and investment demand, has created a bullish fundamental backdrop for silver prices.