Silver prices surged

According to SunSirs' commodity market analysis system, the morning price of silver on December 23, 2025, was 16,320 RMB/kilogram, an increase of 21.66% compared to the average price of 13,414 RMB/kilogram at the beginning of the month (December 1st), and an increase of 119.06% compared to the average price of 7,450 RMB/kilogram at the beginning of the year (January 1st).

Multiple factors were converging to support a surge in silver prices

This significant price increase was the result of a confluence of factors, including rigid supply-side constraints, improved demand expectations, and the influence of monetary policy and macroeconomic expectations. The specific reasons were as follows:

Supply-side constraints:

Limited mineral supply: Approximately 70% of global silver is produced as a byproduct of other minerals (such as copper, gold, lead, and zinc). There is little incentive for independent expansion of silver production, and the process is lengthy. Silver mine production in 2024 was projected at 820 million ounces, a significant decline from its peak, and no new production capacity is expected in 2025.

Recycling supply lagged behind demand: the growth of recycled silver was not keeping pace with the increase in demand, resulting in a global supply deficit for five consecutive years. The deficit is projected to reach approximately 95 million ounces in 2025, with inventories falling to a low level sufficient to cover only 1.2 months of consumption.

Strategic stockpiling was exacerbating tensions: the US added silver to its list of critical minerals, leading to stockpiling and delivery squeezes by traders, driving up leasing rates and spot premiums.  London's deliverable inventory has fallen to a ten-year low, at one point triggering emergency shipments of silver by air.

Demand-side are expected to improve

Industrial demand accounts for over 60% of the total, with photovoltaics (increased silver consumption in TOPCon/heterojunction cells), new energy vehicles, and AI data centers being the core drivers. By 2025, silver used in photovoltaics accounts for nearly 40% of total industrial demand.

Investment demand was surging: Silver ETFs continued to experience net inflows (iShares Silver ETF holdings have increased by over 6% in recent months), driven by the correction in the gold-to-silver ratio and the gold bull market, leading to a synchronized buying spree in the highly volatile silver market.

Investment demand was the main driving factor behind the rapid increase. A speculative atmosphere prevailed.

Monetary Policy and Macroeconomic Expectations as Drivers:

Expectations for Federal Reserve interest rate cuts were rising: weak non-farm payrolls and retail sales data in November, coupled with a dovish stance at the December Fed meeting, have led the market to bet on continued interest rate cuts through 2026. This weakens the dollar and lowers real interest rates, reducing the holding cost of non-interest-bearing silver and increasing its relative attractiveness.

Hedging and Credit Hedging: High global debt levels, rising currency devaluation risks, geopolitical tensions (such as US-Venezuela relations), and concerns about financial stability are driving increased allocation of funds to silver as a "cheap alternative to gold."

Market Outlook

This surge in price is the result of a confluence of factors, including industrial demand, supply and demand dynamics, monetary policy, and capital inflows. Looking ahead, silver prices may face the risk of high-level volatility and corrections in the short term, but in the medium to long term, they are likely to maintain an upward trend due to fundamental support.

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