Silver Prices Hit 14-Year High, Industrial Demand Drives 20% Semiconductor Sales Growth

Silver prices reached a 14-year high over the weekend, but failed to surpass $39 per ounce. Market predictions for silver prices are mixed, with some analysts believing that strong industrial demand will continue to drive prices higher, while others suggest that last week's peak may be the year's high point.

A key driver of silver demand is its use in electrical and electronic products, which is expected to account for nearly 40% of global silver demand in 2024. The semiconductor industry, in particular, is a significant contributor to this demand. Global semiconductor sales have far exceeded last year's figures, with May 2025 sales reaching $59 billion, a nearly 20% year-on-year increase. This growth is expected to offset the decline in silver demand from the solar industry this year.

However, analysts from the Macquarie Commodities team have a different perspective. They emphasize that the current trend in silver prices is primarily driven by increasing investment interest. They note that futures investors are currently taking profits, contrasting with ETF investors who continue to accumulate positions.

Macquarie remains optimistic about the future of silver prices but expects limited upside. They estimate that the average price of silver in the third quarter will be around $36 per ounce, and in the fourth quarter, it will be around $35 per ounce.

Beyond the divergence in investment demand, Macquarie also expresses concern about macroeconomic volatility. As global industrial production growth slows and the pre-tariff demand pull effect fades, silver may lose its advantage as a risk asset.

Nevertheless, Macquarie is optimistic that by 2026, as the global economy regains momentum, silver will outperform gold, driving the gold-silver ratio down to 83. Currently, the gold-silver ratio hovers around 87.