By Dr. Badri Narayanan Gopalakrishnan and Dr. Sarika Rachuri
As we enter 2026, Silver, which was just a number in a rhyme, in 2025, became a leading indicator of both monetary, and industrial trends.
As the world navigates a climate of uncertainty and economic volatility, investors are reassessing their choices of asset classes. The year 2025 was dramatically different for precious metals: gold shimmered at record highs, and silver, often considered gold’s junior partner, surged even more dramatically.
While stock markets in India and globally became comatose – Nifty and other indices posting muted returns, silver’s rally stood out, reflecting a rare combination of safe-haven buying and industrial demand.
The reasons for muted equity returns were many – U.S. President Trump’s dramatic and sweeping tariff injunctions for India in particular due to India’s buying of sanctioned Russian oil, as well as high valuations, both weighed heavily.
Discerning investors, in order to increase their returns in India, were forced to diversify away from equities, and started seeking recourse by investing in precious metals.
Part of the reason for the precious metals rally was the trend of de-dollarisation, as Central Banks remained net buyers of gold continuing the trend over past years, and this reinforced discerning investors’ shift into these commodities.
Some Central Banks used gold to protect reserves from currency volatility, inflation, trade shocks, and to diversify away from the U.S. Dollar system.
In 2025, some central banks continued buying gold, with major purchasers including Poland, China, Turkey, Kazakhstan, Brazil, Uzbekistan, India (RBI), and others, with 23 countries growing holdings in the first half alone. By October, 2025, Central Banks had bought slightly more than 254 Tonnes of Gold.
The price of Gold went from 2623.81 $ per ounce on 31st December, 2024 to 4315.09$ per ounce on 31st December, 2025 (XAU/USD), delivering a return of 64.46% for the calendar year, 2025. Consequently, Silver, also being part of the precious metals complex, also saw a rub off from higher gold prices.
Hence, for Silver, it was also a case of collateral benefits. Historically, Gold and Silver price returns exhibit a strong positive correlation with the coefficient being 0.8 or higher over rolling periods.
Hence, when gold prices rise, Silver follows suit, even if the magnitude differs, with Silver usually outperforming gold, and vice versa during gold price falls. Silver outperforms gold as it is not only a precious metal, but also has significant industrial uses.
Silver, prices went from 28.8738 $ per ounce on 31st December, 2024, to 71.2928 $ per ounce, with a return of 146.91%!
Global industrial demand forecast for Silver
Global industrial demand forecast for Silver remained at 677.4 million ounces in 2025, an increase from 592.3 million ounces in 2022. Industrial demand for Silver increased to nearly 59%, significantly higher than previous years from the 45% in 2016. New uses of Silver also came in:-
- Solar Photovoltaic Cells, with Silver connectors required for efficient collection of the converted solar power into electricity, and accounting for almost a quarter of increased energy supply,
- Electric Vehicles (EV), where there is an increased 67% – 79% use of Silver over ICE (Internal Combustion Engine) vehicles. China has been the leader in adoption of EVs with 49% EV to new vehicle sales, followed by Europe at half that rate, and followed by U.S. at nearly 10% EV to new vehicle sales.
- Data Centres and AI, requiring higher use of Silver in hardware for high performance computing and efficient cooling
In addition, supply worsened, due to:-
- Chronic underinvestment partly due to depressed prices, in exploration and development over the past decade
- Declining ore grades at existing silver mines reducing yield per ton of processed material, and slowing down of new mine discovery.
- Increasing production costs driving marginal producers out of the market
- Environmental, compensatory, and regulatory hurdles extending timelines for new mine development
Majority of Silver production – over 70% comes as a by product of mining other metals, specifically Zinc, Copper, Gold, and Lead. So, rising demand, as well as falling supply skewed the Gold Silver Ratio towards buying Silver as an investment, as well as industrial demand in 2025.
Gold Silver Ratio (GSR)
The Gold Silver Ratio (GSR) refers to the number of ounces of Silver required to buy 1 ounce of Gold. Historically, this has varied between 50 and 80. However, with new uses of Silver, as discussed above, there is speculation that this ratio could fall below 50, even to the extreme extent of 15, making Silver, almost on par with Gold – a historical first indeed!
However, this is speculation, and this is rapidly driving up the price of Silver versus Gold, as Silver returns continue to outperform Gold returns, despite Central Bank buying.
The trade war and tariffs, in addition, is skewing the supply chain, including in the production and export of Silver, with countries like China, reportedly putting fetters on Silver exports.
Just as we outgrow old rhymes and discover new meanings, the emerging trend is that Silver too is stepping out of King Gold’s long shadow and is finding its own identity and space. Sustained industrial demand from the green transition and narrowing gold silver ratio point to a structural and evolutionary shift in silver’s standing .
Five for silver, six for gold – seven for the secret never to be told – a secret that may begin to reveal itself further in 2026.
The authors Dr. Badrinarayan Gopalakrishnan is a fellow at Niti Aayog and Dr, Sarika Rachuri teaches at ICFAI Business School (IBS), Mumbai. Views expressed are personal.
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.