Industrial demand and supply deficits: what drives the silver market

Silver plays a unique role in the global economy. In addition to its value as a precious metal, industrial demand continues to increase. This growing demand is putting pressure on the silver market and is creating a structural scarcity.

Silver as a material in modern technology

While gold is primarily known as an investment metal, silver is first and foremost an industrial material. The metal has unique properties: high conductivity, strong reflectivity, and antibacterial qualities. For this reason, silver is used in electronics, solar panels, and medical products. These applications ensure that demand continues to grow independently of developments in the financial markets.

For more historical context, you can read our article on the history of the Dutch silver guilder.

Applications that drive demand

The main driver behind rising demand is digitalisation. Devices such as phones, computers, and servers rely on silver in circuits and connectors. The energy transition is also increasing demand, since virtually every solar cell contains silver. In healthcare, demand is rising for coatings and implants that make use of silver’s antibacterial properties.

According to the World Silver Survey by the Silver Institute, industrial demand even reached a record level in 2024.

Limited supply of new silver

Silver production cannot keep up with growing demand. Only a minority of silver comes from primary silver mines; the majority is produced as a by-product of lead, zinc, copper, and gold mining. This makes it difficult to quickly scale up output. Rising production costs and stricter environmental regulations add further challenges. Recycled silver is becoming more important but is still insufficient to meet total demand. As a result, the silver market has been in deficit for several years, and this trend shows little sign of changing in the near future.

The silver market in perspective

In recent years, silver has been catching up after a long period of lagging behind gold. Industrial applications have provided a stronger foundation for the market. This makes silver interesting to follow, precisely because its value is not only influenced by investors but also by structural developments in the global economy.

The Silver Mountain does not provide individual investment advice. This article is intended for informational purposes only. Past performance and described market developments are no guarantee of future results.