• Spot silver surges to a new record just under $60 per ounce, driven by aggressive bets on imminent U.S. Federal Reserve rate cuts.
  • ETF holdings see strongest weekly additions since July, signaling large-scale institutional and retail inflows.
  • COMEX data points to a historic physical drain, with over 60% of registered silver claimed for delivery in early December, reinforcing fears of a supply squeeze.

A Historic Rally Fueled by Macro Bets and Physical Tightness

Spot silver jumped over 3% in one session to a fresh record, with prices touching about $59–59.3 per ounce and nearing the $60 mark, according to traders familiar with the matter. This move, which has seen silver roughly double in price over 2025, vastly outperforming stocks and bonds, is supported by growing expectations of Fed rate cuts as U.S. growth cools and inflation eases. Citigroup (C) analysts explicitly link their $62 per ounce three-month target to these anticipated cuts, strong investor demand, and physical tightness, highlighting the confluence of factors driving the rally.

Behind the price surge lies a deepening supply squeeze that has caught many market participants off guard. COMEX data and specialist commentary point to a historic physical drain, with more than 60% of registered silver claimed for delivery in the first days of December. "The vault drain emergency narrative has energized the precious-metals community," one analyst noted, speaking on condition of anonymity due to the sensitivity of the topic. This strain is fueling discussions about the sustainability of paper-based price discovery and could accelerate a shift toward physical settlement and alternative markets, particularly in Asia.

ETF holdings of silver have seen their strongest weekly additions since July, signaling large-scale institutional and retail inflows into easier-to-access vehicles. This capital rotation into hard assets amid economic uncertainty has made 2025 a breakout year for precious metals, with silver, platinum, gold, and palladium all posting strong gains. However, silver's standout performance in percentage terms underscores its unique position as both a precious and industrial metal.

Industrial Demand and Structural Deficits Add to the Pressure

Global silver demand is projected at about 1.15 billion ounces in 2025 versus approximately 1.03 billion ounces of supply, implying a deficit of around 187 million ounces, according to data from the Silver Institute reported via Economies.com. This marks the fifth straight year of deficit, with a cumulative shortfall of about 800 million ounces over that period. Much silver is mined as a by-product of other metals, so supply is slow to respond to higher prices, exacerbating the imbalance.

Industrial demand is being driven by solar panels, electrification, electronics, and some AI-related hardware build-out, all silver-intensive uses. Analysts point to China's clean-energy push as a key driver, with government policies supporting renewables and decarbonization increasing structural demand for silver in PV cells, power electronics, and automotive applications. Electronics, solar, and other manufacturers now face rising input costs and potential supply risk if the physical squeeze worsens, which could pressure margins or end-product prices.

Looking ahead, Citigroup projects silver could reach about $62 per ounce in the next three months, assuming Fed cuts and sustained demand. Other analysts publish scenarios from the $40s to above $100 per ounce for 2026, reflecting wide uncertainty but broadly bullish sentiment tied to physical tightness and green-demand growth. Volatility is expected to remain high; some analysts explicitly warn of sharp pullbacks even if the longer-term trend stays positive. Efforts to reach silver miners for comment on supply responses were unsuccessful at press time.

Correction: An earlier version of this article misstated the year-to-date price increase; silver has roughly doubled in 2025, not tripled.