Silver At All-Time Highs After Five Years of Market Deficits
Silver’s dual nature—as both an investment asset and a critical industrial input—continues to shape its market dynamics. It is primarily the industrial side that has driven demand in 2025, which is expected to remain stable at around 1.20 billion ounces. The automotive sector has been a key contributor, as increasingly sophisticated and environmentally focused vehicles require more silver, particularly for microchip production and catalytic applications. This has combined with strong demand from the consumer electronics sector, once again fueled by the rapid expansion of AI-driven devices.
In contrast, the jewellery segment has struggled, particularly in India and China, where demand has declined by low single-digit percentages. Record-high equity markets have also encouraged investors to diversify, supporting allocations into silver (XAG).
A crucial factor to highlight is that the silver market has now been in deficit for five consecutive years. Annual production stands at roughly 800 million ounces, despite a roughly 3% increase in mining output in 2025. This implies that supply still falls short of demand by about 19%, even with rising recycling activity—largely from jewellery and to a growing extent from industrial scrap. Against this backdrop, it is unsurprising that silver—whose performance tends to be highly correlated with gold—is trading at nominal all-time highs.
Technical Analysis
Silver ($53.95, +1.06% this morning) is once again nearing the highs recorded at $54.48 on 17 October 2025 and is currently forming two notable patterns worth close attention. On one hand, price action appears to be shaping a bullish triangle, with its lower bound defined by the lows of 28 October and 21 November, reinforced by the 50-day moving average. On the other hand, the $54.50 area could evolve into a triple top.
The RSI has eased from strongly overbought levels one month ago (87) and now sits at a more moderate 62.89. In addition to the supportive 50-day moving average ($49.13), the 200-day moving average ($38.82) also shows a clear upward slope. Trading volumes, which surged in mid-October, have eased slightly but remain elevated relative to historical norms. Bollinger Bands are flat and wide (a $7.30 spread between upper and lower bands), with price currently testing the upper band.
In the short term, this latter point represents the main technical headwind. Two additional considerations are the year-to-date performance (+84.80% as of yesterday’s close) and the fact that the $54.50 resistance has not yet been breached, leaving open the possibility of a triple-top formation. However, should this level be convincingly broken and sustained, the outlook for XAGUSD—silver—would turn even more constructive.