Silver Market Faces Structural Deficit Amid Supply Constraints and Robust Industrial Demand
The silver market is facing a structural deficit in 2025, with analysts pointing to supply constraints and robust industrial demand as key drivers. The Silver Institute projects a fourth consecutive year of market deficit, driven by record-high industrial demand from green energy transition technologies.
Mine output remains constrained due to operational disruptions in major producing countries like Mexico and Peru. Additionally, recycling rates have not kept pace with demand growth, exacerbating the supply-demand imbalance.
Investor sentiment has turned increasingly bullish, supported by expectations of central bank rate cuts later this year. This is expected to boost dollar-denominated precious metals, including silver. Analysts at major banks have set price targets ranging from $35 to $40 over the next 12 months, citing continued demand growth and supply tightness.
As of early 2025, silver is trading around $31 per ounce, having gained roughly 25% over the past year. However, investors should remain aware of potential volatility from macroeconomic shifts and policy changes.