Silver prices bounce back by 3.33% as they hit $ 74.50, a $ 2.40 increase from their previous close of $ 72.10. The white metal continues to be volatile since its unprecedented rally has been one of the most remarkable and widely followed stock market events of the year.
Silver’s YTD chart shows an exponential surge as the metal started off around $28 on 2025, January 1st and has reached $74 as the year comes to an end. A 164% surge driven by real-world factors such as industrial demand for silver for solar panels, EVs, and AI data centres. US presidents’ tariff wars and geopolitical instability have also contributed to huge inflows into silver, which drove the price to historic highs.
The Historic High of $84 and the Short Squeeze
Although the silver rally has continued for the entire year, the metal peaked at around $84 on December 29th. This fleeting peak was primarily driven by panic-buying by big traders who went short on silver, expecting its prices to drop. The metal surprised and squeezed the short sellers as its rally was not driven by the usual market patterns but by real-world events like the actual physical deficit of silver. Moreover, the CME’s regulatory interventions also amplified the squeeze.
The Vanishing Metal: Silver’s Five-Year Supply Shortage and Depleting Comex Warehouses
The primary driving force behind the rally is the structural deficit of silver. For the past five years, silver consumption has exceeded its mining production. According to market research by an industry analyst, this deficit can be as massive as 206 million ounces of silver. Some other researchers ramp up this number to 300 million ounces, accounting for the silver requirement for emerging AI hardware industries.
Also Read: Silver Surpasses Nvidia’s Market Value in 2025 Precious Metal Surge
Draining of Silver Warehouses Around the Globe
Silver warehouses around the world, including the USA’s COMEX, London silver market, and China’s Shanghai vaults, saw an unprecedented draining of silver in 2025. The COMEX has to be shut down for 10 hours as it could deliver on a 400M oz silver order, signalling that it is running out of supplies.
China’s Shanghai vault also saw such dramatic declines since 43% of the silver inventories were drained within a period of two weeks in October 2025. Shanghai Future Exchange Facility now holds 531,221 Kg of silver- an all-time low of the decade.
Trump’s Import Tariffs and Risk of Trade Wars Gave Silver an Extra Push
On February 1, 2025, the US President announced tariffs on the world’s two biggest silver producers: Mexico and China. Mexico Mines 202 million ounces of silver every year, while China mines 109 million ounces, together accounting for 38% of the world’s silver production. A 25% tariff on Mexico and a 10% tariff on China had Wall Street scrambling for silver as the incoming trade wars between countries may drive the price to unprecedented heights.
Why is Silver Likely to Continue Its Rally in 2025?
Silver’s rally is not merely driven by market psychology and pattern-based predictions, but by real-world deficit and demand. As long as COMEX, London, and Shanghai vaults have depleting silver supplies and industrial demand for silver skyrockets, silver is likely to keep rising. Apart from solar panels and EVs, the booming AI infrastructure also demands silver supplies in massive proportions. Thus, while the volatility persists, the fundamental driving forces behind the rally remain concrete.
