Silver has turned out to be 2025’s standout performer in the investment space. Silver exchange-traded funds (ETFs) have delivered nearly 100% gains so far this year, outpacing most asset classes. The metal surged to around Rs 1.8 lakh per kg in the domestic market, marking a historic high. Motilal Oswal’s latest long-term silver outlook tries to answer the question that every trader and jeweller is asking, is this a temporary bubble or the start of a structural bull market?
Motilal Oswal pointed out that the silver market has become strikingly inelastic on the supply side. Historically, a 10% jump in silver prices would trigger a 5–7% rise in mine output as producers expanded capacity or processed higher-grade ore. Today, that response has collapsed. The brokerage estimates that the same 10% price rise now results in only a 2–3% increase in production, as nearly three-fourths of global silver output comes as a by-product of lead, zinc and copper mining. This structural rigidity means supply cannot adjust quickly enough to meet growing industrial demand, making higher prices a necessary balancing mechanism rather than a temporary anomaly.
Motilal Oswal on Silver’s dual identity
Motilal Oswal describes silver as a “dual-identity metal”, one that bridges two worlds. It behaves like a precious metal during periods of financial uncertainty, drawing investors as a hedge against inflation and currency risk. At the same time, it functions as a core industrial material, indispensable to solar panels, electronics, and electric vehicles. This twin character, the report says, makes silver unique: part safe-haven, part workhorse. And that duality, rather than speculation, is what’s powering the current rally.
Motilal Oswal on Silver: Dealing with the deficit
The key datapoint in the report is industrialisation. Industrial use accounted for about 59% of silver demand in 2024, with industrial fabrication rising to a record 680.5 million ounces and projected to exceed 700 million ounces in 2025. Total demand is placed at roughly 1,148 million ounce against supply near 1,030 million ounce, implying a structural deficit of about 118 million ounce in 2025. That deficit, Motilal Oswal argues, is not transitory.
Mine supply response is weak. Approximately 70–75% of silver is produced as a by-product of base-metal mining, so silver output is tied to copper, lead and zinc economics rather than the silver price itself. The report estimates potential mine additions of only about 1,000–1,500 tonnes by 2027 roughly one-third of the current annual deficit leaving visible stocks to bear the adjustment. Global visible inventories have fallen sharply since 2020. Motilal Oswal pointed out that “above-ground inventories could decline to about 890 million ounce by 2027-end if current deficits persist, tightening the pool of deliverable metal even further.”
Motilal Oswal on Silver: Demand is real, supply isn’t
The silver market recorded a deficit of around 109 million ounces in 2024, with total demand estimated at 1,138 million ounces against supply of 1,029 million ounces, according to Motilal Oswal’s analysis of industry data. The brokerage expects the shortfall to widen to about 118 million ounces in 2025, as demand rises to nearly 1,148 million ounces while supply remains largely unchanged around 1,030 million ounces.
Sector wise utilisation of silver
- Solar photovoltaic (PV) demand alone consumes over 200 million ounces a year, roughly 14–20% of total global demand.
- Electronics and electricals, the largest single industrial block, used around 445 million ounces in 2023 and continue to grow on the back of 5G, AI and semiconductor production.
- Automotive electrification adds another steady layer, each electric vehicle requires 25–50 grams of silver for wiring, sensors and circuits.
Industrial demand metrics and deficit persistence
Industrial use already accounts for 59% of total silver demand, and that share is climbing.
The brokerage estimates that industrial fabrication hit 680.5 million ounces in 2024 and will exceed 700 million ounces in 2025. The key reason, the world’s clean-energy and electronics expansion is silver-intensive.
Supply constraints: a problem with no quick fix
Silver’s supply chain is structurally inflexible. About 70–75% of global silver output is a by-product of mining other metals like zinc, lead, and copper. That means miners don’t ramp up silver production just because prices rise.
Motilal Oswal noted that global mine supply has stagnated around 830–850 million ounces a year. Recycling adds another 170–180 million, but that still leaves a gap of over 100 million ounces annually, an imbalance that has persisted since 2021.
Meanwhile, visible inventories are shrinking. The London Bullion Market Association (LBMA) reported holdings down by nearly 31% since 2020, while COMEX and Shanghai vaults have also seen sharp drawdowns. The metal is literally moving out of warehouses into factories.
Indian ETFs and MCX volumes show growing investor conviction
Investor interest in silver has surged alongside industrial demand. Motilal Oswal highlights strong inflows into Indian silver ETFs this year, with total holdings up over 60% year-to-date.
Funds like Nippon India Silver ETF and ICICI Prudential Silver ETF have delivered stellar returns in 2025, closely tracking global prices. On the MCX, daily turnover in silver futures has risen sharply, with traders taking positions to hedge against rupee depreciation and volatility.
The brokerage recommends a two-part approach for Indian investors:
- Use ETFs for long-term exposure to capture the structural uptrend.
- Use MCX futures tactically for short-term opportunities when the market trades in backwardation (spot higher than futures).
It warns that physical bars and coins, while emotionally satisfying, come with GST and storage costs that can eat into returns.
Rupee factor magnifies domestic returns
The rupee’s gradual slide is adding another layer to silver’s rally in India. Motilal Oswal projects the USD/INR to stay in the high-80s to low-90s range over the next two years.
That means even if global silver prices stabilise, Indian investors could still see higher rupee returns. The brokerage estimates domestic prices could reach Rs 2.4 lakh per kg by 2026, assuming silver at $75 per ounce globally.
In short, Indian investors get a double boost, rising global prices and a weaker rupee.
Motilal Oswal on Silver: Volatility risk real, but base case is bullish
Motilal Oswal acknowledged that silver is volatile historically, it moves 1.7 times faster than gold in either direction. So sharp corrections are inevitable, especially if global growth slows or industrial orders dip.
But the brokerage is clear, the broader trend is intact. Motilal Oswal expects silver to consolidate around $50–55/oz in the near term before resuming an uptrend, with targets of $75/oz by 2026 and $77/oz by 2027 under its base case. On domestic terms, assuming dollar-rupee in the high 80s to low 90s, this equates to roughly Rs 2.4 lakh per kg at $75 and Rs 2.46 lakh per kg at $77.
The brokerage cautions that volatility and demand-side or recycling shocks could produce sharp interim moves, but it judges the longer-term revaluation to be driven by structural industrial demand rather than short-lived speculation.