Silver prices have surged dramatically in 2025, nearly doubling since August and reaching record highs as the precious metal outpaced gold and grabbed global market attention. This spectacular performance has been driven by strong investor demand, supply constraints, and speculative positioning, but experts caution that the rally may not be sustainable.
According to Manish Banthia, Chief Investment Officer – Fixed Income at ICICI Prudential Mutual Fund, such steep and rapid rises in silver prices historically have often ended in sharp corrections rather than smooth plateaus. While the current uptrend reflects solid industrial demand and market enthusiasm, past cycles suggest that silver’s big rallies tend to be followed by significant downturns, posing a risk for investors chasing prices near all-time highs.
The present surge was partly sparked by speculative buying around fears of potential U.S. tariffs on silver imports. Traders pre-emptively moved large quantities of silver to hedge against possible duties, draining inventories and fuelling price spikes. As silver climbed to record levels, these extraordinary dynamics intensified volatility across global markets.
However, Banthia points out that silver’s dual role — as both an industrial metal and a speculative asset — makes it unusually volatile. Unlike income-producing assets such as stocks or bonds, silver’s price is heavily driven by investor sentiment and positioning, which can shift rapidly. Historical episodes, such as the dramatic silver rise and collapse around 1980 and the peaks in 2011, saw subsequent price falls of more than 75 %, underscoring the potential for steep reversals once momentum fades.
Industrial demand, particularly from sectors like solar energy and electronics, has helped sustain the rally, but higher prices may eventually dampen consumption as manufacturers seek alternatives or reduce usage. Elevated prices also encourage increased supply over time, which can mitigate shortages and ease upward pressure.
Banthia’s message to investors is clear: record prices alone do not guarantee future gains. While the rally may continue in the near term, history suggests that sharp reversals are possible once speculative momentum breaks, making timing and risk management critical for market participants.
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