The Re-Monetisation Of Silver Has Begun

The re-monetisation of silver-a shift from its traditional role as an industrial commodity to a recognized store of value-is accelerating in 2025, driven by converging forces of industrial demand, monetary policy shifts, and central bank strategies. This transformation, underpinned by structural supply deficits and a global reevaluation of currency stability, positions silver as a critical asset in an era of fiscal dominance and de-dollarization.

Industrial Demand: A Structural Catalyst

Silver's industrial demand has surged to unprecedented levels, accounting for 59% of total usage in 2025. This growth is fueled by its indispensable role in renewable energy infrastructure, particularly solar photovoltaic (PV) installations, which now consume 15% of annual silver supply. The global transition to electrification-spanning electric vehicles (EVs), consumer electronics, and defense technologies-has further strained supply chains. For instance, a single EV requires approximately 20 grams of silver, while a solar panel demands 20–30 grams.

This industrial demand is compounded by a seven-year structural deficit in the silver market, where demand has consistently outpaced supply. Reduced freely traded silver inventories and constrained mining output have created a fragile equilibrium. Analysts warn that even modest increases in demand could trigger sharp price spikes, a phenomenon dubbed the "silver squeeze".

Monetary Policy and the Debasement Trade

Monetary policy has emerged as a second-order driver of silver's re-monetisation. The U.S. Federal Reserve's accommodative stance, coupled with a weaker dollar and easing 10-year Treasury yields, has bolstered silver's appeal as a hedge against inflation and economic uncertainty. This trend aligns with the broader "debasement trade", where investors and central banks increasingly allocate capital to hard assets amid concerns over currency devaluation and fiscal imbalances.

Silver's dual identity-as both an industrial metal and a monetary asset-has amplified its sensitivity to speculative capital. In 2025, inflows into silver-backed exchange-traded products (ETPs) surged, reflecting growing retail and institutional confidence in its value proposition. By October 31, 2025, silver prices had reached $48.69 per ounce, a record high, underscoring its re-emergence as a strategic reserve asset.

Central Bank Policies and Historical Parallels

The Indian Reserve Bank's decision to recognize silver as eligible collateral for banking operations at a 10:1 ratio to gold marks a watershed moment. This policy shift not only integrates silver into the credit system but also signals institutional confidence in its price appreciation. Similarly, Asian and Eastern European central banks have accelerated gold purchases in 2023–2024 to mitigate risks from dollar dominance and geopolitical instability.

Historical parallels, such as the 1971 Nixon Shock, highlight how monetary systems restructure during periods of fiscal stress. Today's dynamics-characterized by systemic currency devaluation and structural debt imbalances-mirror these events, reinforcing the shift toward physical commodities as alternative value stores. Central banks are no longer passive observers; they are actively repositioning reserves to hedge against systemic risks.

### Future Outlook: A Dual-Driven Price Re-Rating
Looking ahead, silver's price trajectory is poised for a re-rating driven by both industrial and monetary forces. Analysts project average 2025 prices in the mid-$30s to $40s per ounce, with some forecasts reaching $65. The structural supply deficit, combined with reduced inventories and geopolitical uncertainties, creates a high-probability scenario for sustained price appreciation.

For investors, the re-monetisation of silver represents a unique opportunity. Unlike gold, which has long been entrenched as a monetary asset, silver's dual role offers exposure to both industrial growth and currency devaluation risks. As central banks and global investors continue to diversify portfolios, silver's role in the monetary system is likely to expand, cementing its status as a cornerstone of the 21st-century financial landscape.