What does the silver price spike have to do with electric cars and a festival in India?

While for decades the value of an ounce (28 grams) of gold, platinum and palladium on world stock exchanges has been measured in hundreds and thousands of dollars, the price of silver is calculated in tens of thousands.

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Illustration, Photo: REUTERS/Murad Sezer

Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

16.12.2025. 10:48h

Grujica Andric

BBC journalist

Among the four precious metals, silver has long been the "ugly duckling" if price is the criterion.

However, 2025 is the year of silver, as its value has doubled compared to the previous year, which is a far stronger growth than the other three precious metals.

An ounce of silver was selling for almost $62 (around €53) on December 10th., which is 113 percent more than last year's value, and this year the price reached an all-time record for only the third time since the early 1980s.

Behind the multi-year growth, and especially during 2025, lies the "dual role" of silver, economist Duško Bodroža tells BBC Serbian.

"Silver is traded on the markets, it is important for investors and its price is determined based on supply and demand, just like gold and other precious metals, but it does not play the role of a safe investment during inflation to that extent," explains the senior research associate at the Institute of Economic Sciences.

Unlike them, silver has wider industrial uses, especially in the production of modern technologies.

"It is used for solar panels and other forms of renewable energy, in telecommunications technologies, for the production of medical equipment and electric cars."

"This had a decisive impact on the significant growth in demand, and therefore prices, in the previous period," adds Bodroža.

Rohit Sawant, an analyst and vice president of the American CPM Group, a financial and investment consulting firm, also noted several reasons for the price jump.

"The most important among them is the strong growth in investor demand."

"Increased political risks, both domestically in several major economies and geopolitically in important regions of the world, have encouraged investors to choose silver as a way to diversify their investments," says Savant in a written response to the BBC in Serbian.

Watch the video about the big jump in the price of silver

Why is silver twice as expensive as last year?

Noble metals are characterized by lower susceptibility to corrosion and lower chemical reactivity.

But silver is also a good electrical conductor, making it suitable for industries that have seen a surge in recent years, such as the production of electric cars and solar panels.

"This is the primary reason for the price increase," says Duško Bodroža.

Other precious metals have also increased in price this year, primarily gold, whose value on stock exchanges in December was more than 50 percent higher than last year.

A reduction in the US central bank's (Fed) benchmark interest rates is also expected, which is a signal for investors to buy more precious metals, Yeo He Chua said, a professor at Nanyang Technological University, for the BBC.

"Then demand naturally shifts to what is considered a safe way to preserve asset value, and that includes silver," he adds.

When uncertainty in the business world is combined with a lack of supply on the market, price increases are a natural result, adds Bodroža.

"Silver mining production has lagged behind demand growth, inflation has increased production costs and global inventories have been depleted, creating additional pressure," the economist notes.

But, an analysis by the US-based CPM Group found that this is primarily a "silver shortage narrative" rather than an actual supply shortage.

"The analysis showed that there is enough already mined silver on the world market, but we have had local shortages, first in India, then in London, and now in China."

"This lack of balance has triggered price volatility and increased investor perceptions of fear, even though the risk of systemic shortages is low," explains Rohit Sawant.

When it is At the beginning of the year, US President Donald Trump introduced tariffs on a large number of countries., gold and platinum were not on the list, because his administration deemed them important to the American economy.

But tariffs on silver were imposed, so large American companies and traders decided it was the right time to stockpile it.

Stockpiling leads to a shortage of supply in the free market.

"Risk managers, financial and industrial entities have not allowed any silver to leave America for fear that it could later return at a 35 percent higher price," said Rona O'Connell, chief market analyst at US-based Stone X.

"They're guarding it and that created a small deficit, and then India stepped in," she concluded. interview with CNBC television.

Rohit Sawant supports this phenomenon with data: during October, 10,9 million ounces of silver were sold on global stock exchanges, but investors then bought twice as much in November - 21,8 million.

"Investors are now also considering the possibility of the US government listing silver as a key mineral, leading to speculation about possible export bans."

"While we don't have any official moves, the narrative itself could attract speculative demand and lead to higher prices due to perceived risk," explains Savant.

Watch the video: Why gold is bought more during a crisis

How does a religious festival increase silver prices?

India is one of the countries with the highest demand for silver in the world, especially for making jewelry and ornaments.

Demand traditionally grows during the religious festivals of Dhanteras and Diwali, which are held in early November and significantly increase the demand for silver jewelry in India.

Pilgrims in the planet's most populous country adorn their bodies with gold and silver jewelry during these days-long festivities.

This year, 15 to 20 percent more silver was sold during that period than in the same period in 2024, even though prices were as much as 80 percent higher, it announced. American television channel CNBC.

"Most people who sell silver and gold coins are out of stock because the silver is gone," said Vipin Raina, head of trade at MMTC-PAMP, one of India's leading gold and silver dealers.

"I haven't seen this kind of market madness where people are buying this much in my 27-year career," he added in an interview with Bloomberg television.

Rare records and one scam

Only three times in four and a half decades has the record for the price of silver been broken on world stock exchanges.

The first "fell" in January 1980, when silver reached a value of $48,7 per ounce.

They are responsible for this - or, as it will later turn out, LMB - Banker brothers, Herbert and Lamar Hunt.

The sons of a Texas oil tycoon feared that their inherited wealth would be diminished by rising inflation, so during the 1970s they bought and stored large quantities of silver in warehouses around the world, which he wrote about The Wall Street Journal.

In this way, they attempted to circumvent market rules, deliberately increasing the price of silver, which increased many times over in a few months.

The Hunt brothers' intentions were ultimately thwarted by the intervention of the US government, which changed the rules of stock market trading because of them (Silver Rule 7), and that January 7, 1980, was remembered as Silver Thursday.

They agreed to pay damages for market manipulation, were banned from further trading, and declared bankruptcy.

The wait for the next record was more than three decades.

Investors turned to precious metals in 2011 due to the global economic crisis and uncertainty in the financial sector, and since gold prices were already quite high, a large number of them opted for silver.

Due to high demand, the price reached $49,51 per ounce in April of that year., but a precipitous decline soon followed.

After the killing of Osama Bin Laden, the leader of the terrorist organization Al Qaeda, and the reduction of global geopolitical uncertainty, the price fell to $33 per ounce in just a few days.

The third record was set this year, and was broken during the same year, but could be surpassed again very soon.

Gold and silver will continue to grow next year due to expectations that geopolitical tensions will continue and economic activity will slow down, and the US Fed could further tighten monetary policy, forecast by the World Bank.

Since the beginning of the coronavirus pandemic, prices have "increased slightly," as has demand for silver, which "is not the result of short-term stock market speculation," but primarily the result of industry's greater need for that metal, reminds economist Bodroža.

He expects that "the price will continue its upward trend in the long term, as we all turn to ecological transition and technological progress," he adds.