Silver just tagged $120 up ~450% in the last 2 years and itโs now one of the strongest performers.
This move isnโt just hype. Itโs supply pressure + the paper market getting tested at the same time.
Hereโs whatโs actually behind it
๐ฅTHE MARKET HAS BEEN IN A REAL SUPPLY DEFICIT FOR YEARS
This isnโt a one-month issue. Over the last 5 years, global usage has been higher than global production.
Total deficit: ~678M ounces.
Thatโs close to a full year of mine supply missing from the system.
๐ฅREFINED SUPPLY GOT TIGHTER
A major portion of refined supply has been harder to access due to tighter export flows and licensing/restrictions in parts of the supply chain.
Result: fewer bars available globally โ higher physical premiums โ buyers compete harder for metal.
๐ฅINDUSTRIAL DEMAND IS GROWING FAST โ๏ธ
Silver isnโt only a โstore of valueโ metal โ itโs a critical industrial input.
A) Solar demand
Silver is used for conductivity inside panels. As solar capacity expands, silver demand rises. Estimates suggest solar silver demand could climb from ~200M oz/year toward ~450M oz/year by 2030.
B) Data centers, AI, and electrification
More data centers, upgraded grids, and more electronics = more high-performance conductivity demand. In many applications, silver is hard to replace without sacrificing efficiency.
๐ฅTHE PAPER MARKET IS MUCH BIGGER THAN THE REAL METAL ๐งพ
Most silver exposure is via contracts, not delivery. Paper-to-physical leverage is often cited around 350:1.
This structure works until more participants want physical settlement.
When physical demand rises: โข shorts struggle to source metal
โข buybacks accelerate
โข volatility increases
โข forced covering can create a feedback loop
๐ฅLEASE RATES + BACKWARDATION FLASHED PHYSICAL STRESS
A) Lease rates
Borrowing costs for physical silver are usually low. Recently, lease rates jumped near ~39% annualized a signal that sourcing metal became difficult.
B) Backwardation
Spot pricing above futures can appear when buyers want metal now, not later. Silver backwardation reached levels not seen since around 1980 during some periods โ another sign of tightness.
๐ฅREFINING BOTTLENECKS MADE IT WORSE
Around 9.7% of global refining capacity went offline in late 2025. Even when silver exists, it canโt always be processed into usable form quickly.
๐ฅETFs PULLED MORE METAL OUT OF CIRCULATION
ETFs hold real bars. About 95M ounces flowed into silver ETFs in early 2025 alone, reducing available supply for industry and delivery.
๐ฅSILVER BECAME A โSTRATEGICโ MATERIAL
In Aug 2025, the U.S. added silver to its Critical Minerals List - shifting the narrative from โjust a commodityโ toward โstrategic resource.โ
๐ฅWHY SILVER MOVES FASTER THAN GOLD
Gold markets are deeper. Silver is thinner. When demand rises and supply is tight, silver can move faster with sharper swings.
Silver didnโt move for one reason. It moved because of:
โข multi-year deficits
โข refined supply tightening
โข rising industrial demand
โข heavy paper leverage vs limited physical
โข lease rate spikes + backwardation
โข inventory/processing stress
โข ETF absorption
โข strategic classification
The market stopped being driven only by paper pricing.
It started reacting to physical availability.
Not financial advice. Manage risk. โ ๏ธ
