Silver's rally is astonishing: doubling in 2025, far surpassing gold's gains! Institutions are optimistic about the mid-term outlook but warn of short-term corrections.

The silver market is experiencing a rare strong performance in 2025. As of mid-December, silver prices have risen to a new high of over $61 per ounce, with a cumulative increase of 110% since the beginning of the year, far surpassing gold’s 60% gain during the same period. Under the attention of global investors, the driving factors and potential risks behind this rally are worth in-depth exploration.

Supply Chain Tensions and Policy Expectations Resonance

The fundamental reason for the continuous rise in silver prices lies in supply-side imbalances. Since November, when the US included silver in the critical minerals list, market expectations for trade policy changes have been heating up. This has led to a rapid flow of global silver inventories into the US market, while China’s silver reserves have fallen to a ten-year low, further exacerbating supply tightness.

At the same time, expectations of Federal Reserve rate cuts have also supported the rise in silver prices. Compared to gold’s traditional safe-haven status, silver’s properties as an industrial metal make it more susceptible to economic cycles and capital flow changes. When expectations of falling interest rates take shape, the returns denominated in silver are relatively enhanced, attracting substantial capital inflows.

Capital Inflows Accelerate, Driving Volatility Higher

Fund flows into exchange-traded funds (ETFs) have become a key catalyst for pushing up silver prices. Last week, inflows into silver ETFs reached a weekly high since July, indicating active positioning by both institutional and retail investors. However, as Pepperstone analyst Dilin Wu pointed out, such capital flows have amplifying effects, easily triggering sharp price fluctuations and even short-term short squeeze scenarios.

Institutional Outlooks Are Generally Optimistic for the Mid-Term, but Divergences Are Emerging

Major investment banks remain optimistic about the 2026 outlook, but target prices vary significantly. Citibank expects silver to surge to $62 per ounce in the next three months; US Bank, supported by structural shortages and industrial demand, has a target of $65 per ounce in 2026; UBS sets a range of $58-60 per ounce but does not rule out reaching $65.

More aggressive voices come from RJO Futures strategist Bob Haberkorn, who predicts silver could break above $70 per ounce in the first half of 2026. French bank BNP Paribas analyst Philippe Gijsels even boldly forecasts that silver could reach $100 per ounce by the end of 2026 (equivalent to approximately 980 Japanese Yen on the international level).

Short-term Correction Risks Should Not Be Ignored

However, the warning from Suki Cooper, Head of Global Commodities Research at Standard Chartered Bank, deserves attention. Although the upward momentum of silver is supported by fundamentals, the gradual normalization of traditional market dynamics may bring short-term volatility. Notably, London’s available inventories are rising at a faster pace, reflecting a loosening of supply conditions, which is an important turning point signal.

From a technical perspective, the gold-silver ratio has fallen below 69, reaching a new low since July 2021. This indicator is currently in oversold territory, suggesting that the recent rally of silver relative to gold is approaching a cyclical high. Cooper pointed out that although silver still has room to rise relative to gold, the current gold-silver ratio level indicates that silver may face correction pressures in the near term.

Summary

The 110% increase in silver in 2025 is indeed remarkable, and institutional optimism about the mid-term outlook continues. However, from multiple angles—supply-side easing, capital flow volatility, and oversold technical signals—the risk of a short-term pullback in silver prices is accumulating. Investors should enjoy the gains but also prepare for possible short-term adjustments.