Silver has a wide range of industrial uses, and is essential to the transport, energy, and AI sectors, but its supply and demand relationship is unlike any other. When the price of copper rises, the copper miners responsible for supply typically also increase output. However, around 70% of silver is extracted as a byproduct of mining other metals, such as copper, lead or zinc.[1] As such, the supply of silver is not permanently determined by price, but by decisions made about entirely different metals.
Consequently, the current silver market is operating in a strained, high-price equilibrium, due to a persistent structural deficit. For the last 5 years, there has been around -100 million ounce deficit between silver supply and total demand.[2] This structural inelasticity is proof that silver supply is currently incapable of expanding rapidly, which poses a potential problem for overall inventories.
Source: Sprott Asset Management, Bloomberg, LBMA. Data as of 31/12/2025. For illustrative purposes only. Note: LBMA represents the London Bullion Market Association, COMEX represents the Commodity Exchange of CME Group, and SHFE represents the Shanghai Futures Exchange.
What are the drivers of silver demand?
Unlike gold, which is primarily viewed as a store of value and portfolio hedge, the industrial drive for silver is a product of physics – silver is the most conductive metal on earth – and government policy. Industrial manufacturing applications accounted for 59% of silver’s demand in 2025 – a proportion that is likely to grow as silver demand increases.[3]
Solar panel manufacturing accounted for around 19% of total silver demand in 2024 – compared to ~5.5% in 2015.[4] Silver is used as a conductive paste, which allows the panel to function. While the industry is attempting to reduce reliance on silver within solar panels, silver demand is expected to be around 150Moz in 2026, [5] since there is still no acceptable alternative in terms of conductivity and price.
Electric vehicles (EV) are the second main driver of silver demand. Each EV uses 67-79% more silver than its internal combustion counterparts - across batteries, charging infrastructure, and powertrains.[6] This is especially important given that global EV sales are expected to reach 22.7 million in 2026, marking an increase of over 15% from 2025, and reach 39 million by 2030.[7] [8]
The third and more nuanced driver of demand is electricity. The global information technology power capacity has increased by approximately 5,200%, from 0.93 GW in 2000 to nearly 50 GW in 2025. In the eastern hemisphere, this is largely driven by the urbanisation and industrialisation of developing states. Meanwhile, in the West, the drivers are mainly Artificial Intelligence (AI), data centres, electrification, and reshoring. There is also the broader global demand for a greater focus on decarbonisation, and therefore electrification.
These trends are estimated to produce a world electricity demand of over 81,000 TWh by 2050.[9] The building and supply of data centres and other electricity dependent assets, could drive silver demand even further.
These factors are built upon a shared characteristic, that is, they are driven by policy mandates, irreversible infrastructure investment, and the physics of electricity conduction; structural investments that take decades to resolve.
What could this mean for both Silver and investors moving forward?
Silver is not a simple metal. It is volatile; it has a monetary element that is sensitive to interest rates and dollar value. After surging 161% in 2025, breaking the $80/oz barrier for the first time – compared to gold that climbed 66% — it has since experienced a correction to $79/oz in the beginning of February, which is consistent with previous behaviour.[10]
The supply constraints facing silver are a fact of its extraction, which may continue to influence its uses and valuation. But the structural case for silver in an industrial context is significant; electrification, data centre buildout, energy generation, and EV sales all require intense quantities of silver. Which, when combined with inelastic supply, suggest silver could continue to feature for the long term. Those companies involved in the mining, extraction, purification and end use cases of silver, could stand to benefit meaningfully as silver’s use case remains strong.
This material does not constitute a marketing document. It is not an invitation to invest but to be read for educational purposes only. Past performance and forecasts are not reliable indicators of future results.
[2] https://silverinstitute.org/silver-supply-demand/
[3] Source: World Silver Survey April 2025
[4] https://www.miningvisuals.com/post/the-growing-link-between-solar-pv-capacity-and-silver-demand
[5] https://www.pv-magazine.com/2026/04/15/silver-demand-from-pv-industry-expected-to-drop-19-this-year/
[6] https://silverinstitute.org/silver-demand-forecast-to-expand-across-key-technology-sectors/
[7] https://ev-volumes.com/
[8] https://about.bnef.com/insights/clean-transport/electric-vehicle-outlook/#key-numbers
[9] Source: IEA World Energy Outlook 2025 Net Zero Emissions Scenario
[10] https://www.reuters.com/business/energy/silver-shines-2025-global-market-spotlight-softs-oil-lag-2025-12-31/
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Silver supply is structurally constrained because around 70% of silver is extracted as a by-product of mining other metals, such as copper, lead or zinc. This means silver production does not always rise simply because the silver price increases.
Silver demand is being driven by industrial applications, particularly solar panels, electric vehicles, data centres, AI infrastructure and broader electrification trends. The article notes that industrial manufacturing applications accounted for 59% of silver demand in 2025.
Silver is the most conductive metal on earth, making it important for technologies that rely on efficient electricity transmission. In solar panels, it is used as conductive paste, while electric vehicles use silver across batteries, charging infrastructure and powertrains.
Silver is considered strategically significant because it is essential to major long-term growth areas, including electrification, data centre buildout, energy generation and electric vehicles. These demand drivers are structural, while silver supply remains relatively constrained.
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