While gold hogs the spotlight in 2025’s volatile market, silver is quietly making its case — and fast. Trading near $42 per ounce as of late April, silver has surged over 35% year-to-date, significantly outperforming most asset classes. But unlike gold, silver isn’t just a hedge; it’s a hybrid. It’s both a precious metal and an industrial workhorse — and that dual identity makes it uniquely positioned for the challenges ahead.
photo credit: Merwak / Pexels
Silver isn’t simply trailing gold’s coattails. It’s catching up to a reality investors can’t ignore: supply is constrained, demand is surging, and the financial world is waking up to silver’s strategic importance — from energy transition to de-dollarization. And yet, one metric says it all: the gold-to-silver ratio now hovers around 100:1, a level that strongly suggests silver is grossly undervalued and due for a breakout.
The Fundamentals: A Ratio That Can’t Be Ignored
Gold may have grabbed headlines with its $3,500 peak, but silver remains dramatically undervalued by comparison. The gold-to-silver ratio — a key metric measuring how many ounces of silver equal one ounce of gold — currently sits around 100:1. Historically, this ratio has averaged closer to 50:1. During monetary crises or inflationary spikes, the ratio often compresses to 30:1 or even lower.
What does this mean?
It means silver is trading at a deep historical discount. If the ratio were to simply revert to its 50-year average, silver would need to nearly double in price — and if it returned to extreme-cycle lows, the upside could be 3x or more.
In short: Silver is not just undervalued. It’s mispriced.
This distorted ratio isn’t due to lack of demand — quite the opposite. It’s because gold, buoyed by central bank purchases and fear-driven capital, has surged faster. Silver, traditionally slower to move, often lags… until it doesn’t. When sentiment shifts, silver tends to catch up explosively — a pattern well-documented in previous bull cycles.
Silver’s Industrial Demand: The Unsung Hero
Unlike gold, which is largely ornamental or held in reserves, silver is essential to modern industry. Its industrial utility is precisely what gives it long-term tailwinds:
- Solar panels: Silver’s conductive properties make it irreplaceable in photovoltaic cells. The global solar boom is devouring silver at record pace.
- Electric vehicles (EVs): Every EV contains up to 50 grams of silver — and EV production is accelerating.
- Electronics and connectivity: From 5G networks to semiconductors and medical devices, silver is embedded in the infrastructure of modern life.
In 2024, industrial demand for silver hit a record 680.5 million ounces, according to the Silver Institute. That number is expected to rise again in 2025, driven by clean energy investment and AI-powered manufacturing.
This dual identity — a monetary metal and a green energy input — positions silver as a uniquely versatile asset in any investor’s portfolio.
A Supply Crisis in Plain Sight
At the same time, supply isn’t keeping up.
Silver is not typically mined directly. It’s produced as a byproduct of other metals like copper, lead, and zinc — metals currently facing their own macro headwinds. This means silver’s supply is largely reactive, not strategic, and has not kept pace with its rising demand.
Add to that:
- Political instability in key producers like Peru and Mexico
- Environmental restrictions delaying new mining projects
- Years of underinvestment in exploration
The result? A growing structural deficit. In 2024, the silver market recorded a deficit of over 200 million ounces, and that figure is expected to worsen. Investors betting on supply responding to demand may be in for a shock.
Silver as a Monetary Hedge — with Leverage
Like gold, silver protects against:
- Inflation
- Currency devaluation
- Geopolitical instability
- Systemic financial risks
But silver brings volatility with a vengeance — which, for investors, means leverage. In the 1970s, silver rocketed from $6 to nearly $50 during stagflation. In 2011, it did it again, reaching $49 even as gold rose more modestly.
If inflation continues to simmer beneath manipulated CPI numbers, or if debt monetization continues, silver could repeat this historic behavior.
Importantly, as gold becomes expensive and out of reach for many investors, silver becomes the “people’s metal” — affordable, tangible, and scarce.
A Digital Silver Squeeze Reloaded?
In 2021, retail investors coordinated a “Silver Squeeze” to expose what they believed was rampant over-leveraging in silver’s paper markets. While the movement faded, it exposed a key vulnerability: the disconnect between physical silver and paper claims.
Today, silver ETFs and futures still operate with leverage that far exceeds actual available metal. If demand spikes — especially if physical delivery is requested — a cascading short squeeze could erupt, sending prices sharply higher.
Combine this with de-dollarization trends and distrust of centralized financial systems, and it’s not hard to imagine a second — more sustained — silver squeeze playing out in 2025 and beyond.
Gold vs. Silver: The Real Case for Rotation
| Factor | Gold | Silver |
|---|---|---|
| Inflation Hedge | Proven | Proven, more volatile |
| Industrial Demand | Minimal | Exploding |
| Gold-to-Silver Ratio | At historic highs | Signals breakout potential |
| Accessibility | $3,300/oz | $42/oz |
| Supply Constraints | Tight but steady | Severe deficit looming |
| Institutional Buying | High (central banks) | Low (still early) |
When the gold-to-silver ratio is this skewed, history says one of two things happens: gold collapses, or silver plays catch-up in a spectacular move. Given silver’s current fundamentals, the latter looks far more likely.
Conclusion: Silver’s Time Is Coming — Fast
In 2025, silver is where gold was two years ago: ignored, undervalued, and preparing for a breakout.
Whether you’re looking to hedge against inflation, diversify into hard assets, or bet on the clean energy transition, silver offers asymmetric upside in a world of asymmetric risks.
The 100:1 ratio isn’t a curiosity — it’s a warning signal. One that serious investors would do well not to ignore.
