Silver at $75 and Beyond: A Strategic Asset in the New Industrial and Monetary Era

The global silver market is undergoing a profound transformation, driven by structural supply-demand imbalances and a confluence of industrial and monetary forces. As the world transitions toward electrification and green energy, silver's role as a critical industrial input is expanding, while its historical function as a monetary hedge is re-emerging in a high-inflation, low-interest-rate environment. This dual dynamic positions silver as a strategic asset for investors seeking exposure to both technological innovation and macroeconomic resilience.

Structural Supply Constraints: A Deficit Entering Its Fifth Year

The silver market has been in a persistent deficit since 2021, with the 2025 shortfall projected to reach 117.7 million ounces. Mine production, which accounts for 70% of global supply, has stagnated at around 813 Moz annually due to maturing orebodies, regulatory hurdles, and capital constraints. A critical structural challenge is that most silver is produced as a byproduct of copper, lead, and zinc mining, limiting its responsiveness to price signals. For instance, Chile-a key silver producer-saw output decline in 2024, while lead/zinc mining overall remained flat. Recycling, though rising by 6% in 2024 to 193.9 Moz, remains insufficient to offset primary production declines.

This inelasticity is compounded by the fact that industrial demand, which accounts for 50% of total consumption, is growing at a faster pace than supply. Solar photovoltaic (PV) installations alone consumed 289 Moz in 2024, with the U.S. Inflation Reduction Act and European Green Deal accelerating demand. Electric vehicles (EVs), which require 25–50 grams of silver per unit, added another layer of growth. Meanwhile, 5G infrastructure and medical applications, such as antimicrobial coatings, further solidify silver's irreplaceability in high-performance sectors.

Industrial Demand: The Engine of a New Supercycle

The electrification revolution is the primary driver of silver's industrial demand surge. Solar PV demand alone is projected to consume 232 Moz in 2025, with cumulative requirements by 2050 potentially reaching 85–98% of current known reserves. This structural re-rating is supported by the metal's unmatched conductivity and efficiency in energy conversion, making it indispensable for renewable energy systems.

EVs and AI-driven data centers are also amplifying demand. The latter relies on silver for thermal management systems and high-efficiency components, with AI adoption expected to grow exponentially in the coming years. Analysts note that silver's price inelasticity in these applications-due to its unique properties-ensures sustained demand even as prices rise.

Monetary Relevance: Silver's Resurgence as an Inflation Hedge

While gold has historically outperformed silver as a store of value, the latter's dual role as both an industrial and monetary asset is gaining traction. In 2025, silver ETFs surged, with the iShares Silver Trust (SLV) delivering a 98.01% year-to-date return and the ProShares Ultra Silver (AGQ) exceeding 300%. Investor inflows reached $2 billion, dwarfing gold's $33 billion, as silver's price approached $69.5 per ounce.

The gold-silver ratio, currently at 100:1, suggests silver is undervalued relative to gold. This divergence reflects silver's growing appeal as a high-yield, inflation-hedging asset in a world of currency debasement and geopolitical uncertainty. Central banks, while prioritizing gold, have indirectly supported silver by shifting reserves away from U.S. Treasuries.

Price Projections: $75 and Beyond

Analysts project silver to reach $75–$100 per ounce by 2026, driven by a confluence of factors. The World Bank and Citigroup forecast prices between $41 and $72, while Alan Hibbard of GoldSilver anticipates a $100+ target. Key drivers include:
1. Structural Deficits: The 2025 deficit of 117.7 Moz is expected to persist into 2026, with shrinking inventories and industrial demand outpacing supply.
2. Macroeconomic Tailwinds: Lower real interest rates, potential Fed rate cuts, and a weaker U.S. dollar enhance silver's appeal as a non-yielding asset.
3. ETF Dynamics: Surging ETF inflows have tightened physical market conditions, pushing lease rates higher and amplifying price pressures.

Risks and Considerations

While the case for silver is compelling, risks remain. A global economic slowdown or liquidity crunch could dampen industrial demand or trigger a sell-off in precious metals. Additionally, real interest rate hikes could erode silver's appeal as a non-yielding asset. However, the structural imbalances and green energy transition provide a long-term floor for prices.

Conclusion: A Strategic Asset for the 21st Century

Silver's unique position at the intersection of industrial innovation and monetary policy makes it a strategic asset for investors. The structural supply deficit, coupled with insatiable demand from solar, EVs, and AI, ensures a prolonged bull market. Meanwhile, its role as an inflation hedge-reinforced by ETF inflows and macroeconomic shifts-positions it to outperform traditional safe-haven assets in the current cycle. As the world grapples with energy transitions and currency instability, silver at $75 and beyond is not just a possibility-it is an inevitability.