Silver Run Has a Different Engine This Time

Silver Is Becoming the Market’s Second Insurance Policy

Over the past year, silver has climbed from around US$29 per ounce to nearly US$96. The last time we wrote about silver it was closer to US$79, so the move has continued to accelerate. In our view, part of this is simply that the market has been so focused on gold that silver was easy to underappreciate.

Gold is often treated as both a store of value and a form of financial insurance during uncertain periods. Silver can sit in a similar bucket for many investors. It has a long history as coinage, which is one reason the store of value narrative still resonates. That historical link to money is not the whole story, but it does help explain why silver attracts capital when confidence is fragile.

Where silver stands out versus gold, especially in an AI driven buildout, is that it also has a clear industrial role. Silver is widely used in electronics because of its conductivity and its resistance to corrosion. That means demand can be supported not only by investor sentiment, but also by real world usage as technology investment continues.

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Who’s buying the silver?

Demand trends have remained supportive, reinforcing the view that both gold and silver have been standout performers in recent market cycles. A large part of the sentiment shift has been uncertainty. One useful signal here is central bank buying in gold. World Gold Council data has highlighted Poland as a major buyer, adding around 90 tonnes, with other countries including Turkey and China also featuring prominently in broader demand trends.

When you combine geopolitical tension, central bank diversification, and periods of retail risk aversion, it becomes easier to see why precious metals have stayed well supported. If those conditions persist, both gold and silver have a credible case for continued strength, with silver also benefiting from its industrial exposure as the AI and electrification cycle plays out.

What could 2026 look like for silver? Will the run continue?

Looking ahead, expectations for 2026 are far from one sided. Analysts at Heraeus, in their 2026 Precious Metals Outlook, have cautioned that silver and other precious metals could trend lower during the early part of the year. Their view is that prices have moved too far, too fast, driven by momentum rather than fundamentals alone.

While further upside cannot be ruled out in the near term, they expect momentum to cool and a period of consolidation to follow. For investors, this highlights the importance of understanding where demand is coming from and being selective about timing rather than assuming recent gains will repeat indefinitely.

Silver’s Shine Comes from Solar, Not Speculators

The first and most important driver behind silver’s move, in our view, is the market imbalance between supply and demand. The World Silver Survey reported a structural deficit of 148.9 million ounces in 2024, marking a fourth consecutive year where total demand exceeded newly mined and recycled supply.

What matters for investors is that this is not a one-off tightening. The Silver Institute has flagged another sizeable deficit continuing through 2026. If supply remains constrained while demand holds up, it creates a supportive backdrop for prices, even after a very large run.

On the demand side, silver is becoming more tied to real economic use rather than purely investment flows. Industrial applications now make up more than half of global silver consumption, driven by growth in solar, electronics, and electrification trends.

This shift in the demand mix is important. As silver becomes more embedded in essential technologies, demand is less discretionary and more structural. That is a key reason prices can stay elevated, because silver is not only being treated as a precious metal, it is increasingly being consumed as a critical input into future-facing industries.

How can investors take advantage of the silver surge

So how can investors approach this opportunity over the long term. In our view, the first point is caution. When any asset moves this quickly, the risk of sharp pullbacks increases.

It is also worth taking silver price forecasts with a grain of salt. When pricing is driven by fear and optimism, it is difficult for anyone to gauge the path ahead with certainty. What we can say is that there are clear catalysts that could continue to support silver over the next few years, but investors should remember that fast gains can reverse just as quickly.

That said, if demand continues to grow and no meaningful new supply enters the market, the structural case for silver remains intact.

For investors looking for a simpler and more disciplined way to gain exposure, ETFs can be a practical option. We have already seen products such as Global X Physical Silver (ASX: ETPMAG) rise 15% in a single day, which highlights how sensitive silver exposure can be to price momentum.

Rather than trying to time individual miners or trade short term swings, ETF exposure can provide a cleaner way to participate in the long term thematic upside.

For those seeking broader diversification, Global X Physical Precious Metals Basket (ASX: ETPMPM) also offers exposure across multiple precious metals. This can help smooth volatility while still maintaining leverage to the same underlying macro drivers.