Silver Set to Shine in 2025: Could $40/oz Be Around the Corner?

Silver has long been called the “poor man’s gold,” but if Heraeus Precious Metals is right, it might soon be the smart man’s gold. Analysts are predicting silver will not only continue its upward trend but could outperform gold yet again in 2025, with prices expected to trade between $28 and $40 per ounce.

So, what’s driving this optimism? Let’s break it down.

Silver’s Big Year in 2024

Silver already stole the spotlight in 2024, racking up the largest percentage gains in the precious metals market—up 26.82% through November. Both gold and silver got a lift as the Federal Reserve shifted its stance on interest rates earlier in the year. But silver also had some unique tailwinds:

1. Booming Solar Demand: Solar photovoltaic (PV) installations, particularly in China, have been voracious consumers of silver. These installations hit record highs in 2023 and continued their momentum in 2024, thanks to technological advancements like TopCon solar cells that use more silver per watt.
2. India’s Rebound: After a sluggish 2023, India surged back, importing massive amounts of silver for jewelry and silverware fabrication. This was partly driven by a mid-2024 import duty cut, which lowered costs and boosted consumption.

The Gold-Silver Ratio: A Signal for What’s Next

Here’s where it gets interesting. Despite silver’s rally, the gold-silver ratio remains historically high, signaling that silver is still undervalued relative to gold. Heraeus analysts predict a reversion to the long-term average could send silver prices soaring to $40 per ounce or more.

“Silver tends to outperform gold in the later stages of bull markets,” they said. And if history repeats itself, this could be silver’s time to shine.

Recession Risks: A Double-Edged Sword

But it’s not all sunshine and silver linings. A looming U.S. recession could dampen industrial silver demand. The U.S. yield curve, which uninverted this year after the longest inversion since 1980, has a strong track record of predicting recessions within 6-12 months.

If a recession hits by Q2 2025, industrial uses for silver—outside of solar and electronics—might see minimal growth. Heraeus also warned that Indian demand for silverware and jewelry could cool off after this year’s frenzy, especially if prices climb.

The Solar Sector: Silver’s Saving Grace

Despite potential headwinds, the solar sector remains a bright spot. China’s record-breaking solar installations are just the beginning, with other nations ramping up their gigawatt-scale projects. New solar technologies requiring higher silver content are also expected to keep demand strong well into 2025.

Supply and Recycling: Filling the Gaps

On the supply side, new and restarted silver mines could add 10 million ounces of production next year, representing a modest 1.2% growth. Recycling is also poised to hit a 12-year high as higher prices make silver recovery more profitable.

What Does This Mean for You?

Here’s the big takeaway: silver is gearing up for another stellar year, and the fundamentals are lining up in its favor. With the potential for U.S. interest rate cuts, a weakening dollar, and surging demand in critical sectors, silver is poised to outperform gold again.

And if you’re looking to get ahead of the curve, now’s the time to start paying attention. When silver moves, it tends to move fast—and the $40/oz forecast could be just the beginning.

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