Why Is Silver Going Up? Deficits, Solar and the Gold Ratio

How far silver rose, and how far it fell

Silver averaged $22.92 an ounce in January 2024, according to World Bank monthly prices. It averaged $92.10 in January 2026, a record for any month, up 302% in two years. During the session on 29 January 2026 spot silver touched $121.64, CNBC reported. The Silver Institute noted that silver broke $50 an ounce in 2025 for the first time since 1980, and needed only a short time more to clear $100.

Sources: World Bank Pink Sheet, CNBC, CME Group.

The fall was as fast as the rise. The Silver Institute's World Silver Survey 2026 records a one-day "peak to trough" drop of 38% at the end of January, as leveraged positions were forced out. At $54.513 on 27 October 2026, silver was about 55% below its January high, yet still 138% above its January 2024 average.

Five years of supply deficits

The silver market has consumed more metal than it produced every year since 2021, according to the World Silver Survey 2026, which Metals Focus researches for the Silver Institute. The gap is filled by drawing on stocks held in vaults.

Source: The Silver Institute, World Silver Survey 2026. Balance excludes exchange-traded products.

The 2021 to 2025 shortfalls add up to about 716 million ounces. Including the 2026 forecast, the survey puts the six-year total at 762.1 million ounces, equal to about 90% of a full year's mine output at the 2025 rate.

Supply responds slowly to price. Mine production rose 3% to 846.6 million ounces in 2025 and is forecast to slip 0.3% in 2026. Only 26.1% of mined silver came from primary silver mines in 2025. The rest was a by-product of lead and zinc (29.4%), copper (28%) and gold (15.9%) mining, so output follows the economics of those metals more than the silver price. Recycling reached 197.6 million ounces in 2025, the highest in 13 years.

Industrial demand and solar

Industry is silver's largest customer. Industrial demand reached a record 679.0 million ounces in 2024, and photovoltaics, the solar panel sector, took 197.5 million of that, or 29%. Solar use had more than doubled from 82.8 million ounces in 2020, which is a large part of how the deficits of 2021 to 2024 opened up.

That driver has turned. In 2025 industrial demand fell 3% to 657.4 million ounces, the first decline since the pandemic, and solar demand fell 6% to 186.6 million. For 2026 the Silver Institute forecasts a further 19% drop in solar use, to 151.0 million ounces, even as installations keep rising. Panel makers are cutting the silver in each cell and switching to other materials, a shift the survey attributes to intense competition and rising silver costs.

Other uses are growing. The survey cites demand linked to AI data centres, high-speed transmission hardware, electric vehicles and charging infrastructure. Those gains were not enough to offset the solar decline in 2025. Industrial buying built the deficits, but it was falling as the price spiked.

Investors, the October squeeze and January's spike

Investment did most of the work in 2025 and early 2026. Holdings of silver exchange-traded products rose by 273 million ounces in 2025 to a record 1.3 billion ounces, with 80% of the inflow in the second half. Coin and bar demand rose 14%.

Each ounce bought by a fund is an ounce taken out of the stocks that cover the deficit. In October 2025, with metal moving into CME vaults and tied up in funds, London ran short. The World Silver Survey calls it "an unprecedented liquidity squeeze". Lease rates, the cost of borrowing physical silver, rose sharply, and the survey says the squeeze stressed parts of the refining and manufacturing chain.

Policy added fuel. Silver was added to the US critical minerals list in November 2025. In January 2026, the survey reports, coin and bar shortages, rising premiums and queues of buyers spread across key markets, and in early 2026 mints began rationing bullion coins. Retail buyers also piled into futures and options, which left the market fragile. When the President nominated a hawk to chair the Federal Reserve at the end of January, those positions were liquidated, which produced the 38% one-day fall.

What the gold-silver ratio shows

The gold-silver ratio is the number of ounces of silver one ounce of gold buys. It explains much of the timing. In 2025 gold rose first and silver lagged, pushing the ratio to 107 in April 2025, according to the Silver Institute. Investors looking for the cheaper metal then turned to silver. The ratio fell below 55 in December 2025, its lowest since March 2013, and below 50 in early 2026, a level last seen in 2012.

At the 27 October 2026 settlements of $4,074.60 for gold and $54.513 for silver, the ratio stood at 74.7. Silver has fallen further than gold since January, so the ratio has climbed back toward its 2025 range. A Silver Institute report, summarised in its August 2026 newsletter, finds that the ratio tends to revert to an equilibrium of just under 60. That describes a long-run tendency and gives no timing.

The gold-silver ratio tool charts the ratio year by year back to 1960. For gold's side of the move, see why gold has been going up.

What to watch

Silver trades as both a precious and an industrial metal, so it answers to two sets of data:

• The market balance. The Silver Institute's World Silver Survey, published each April, forecasts a sixth deficit for 2026.
• Solar thrifting. The 2026 forecast assumes a 19% drop in solar use; a slower decline would tighten the market.
• Fund holdings and vault stocks. Inflows to exchange-traded products drain available metal; outflows release it.
• Gold, real yields and the dollar. Silver has tended to follow gold with larger swings in both directions. The 10-year real Treasury yield rose to 2.95% on 5 October 2026, its highest since November 2008.

For the 1980 and 2011 peaks in inflation-adjusted terms, see silver's all-time high.