Since the beginning of 2026, the precious metals market has experienced significant divergence, with the price of silver breaking through barriers and continuously setting new historical records. Data shows that silver has surged by over 80% in just 50 days, a frenzy far exceeding that of gold. This week, the price of silver successfully broke through the $90 per ounce mark, and the gold-to-silver ratio in the London market once dropped to 50.57, hitting a new 13-year low. Behind this seemingly abrupt surge lies a fundamental value reassessment of silver, shifting from its traditional financial attributes towards its "industrial attributes."
The gold-to-silver ratio is a key indicator measuring the relative strength of gold versus silver prices. Since the beginning of 2025, gold and silver have risen by 75% and 190% respectively, meaning silver's increase is 2.5 times that of gold. The gold-to-silver ratio has plummeted steeply from its 2025 peak of 105, nearly halving to around 50, indicating that silver is currently at its most "expensive" level relative to gold in 13 years. However, this "expensiveness" is not merely speculative froth but stems from a profound shift in market logic.
Defying traditional patterns, the current correction in the gold-to-silver ratio has not been accompanied by a recovery in the manufacturing Purchasing Managers' Index (PMI). Historically, each round of ratio correction typically coincided with a rebound in the US PMI. Yet in 2025, despite the US manufacturing PMI remaining below the 50-point boom-bust line for several consecutive months, the gold-to-silver ratio still fell sharply. This indicates that the core driver of the current silver price rally is no longer the traditional manufacturing cycle but its increasingly prominent strategic resource attributes and industrial demand.
In the industrial production sector, the importance of silver is undergoing an unprecedented elevation. As the material with the highest electrical conductivity among all metals, silver plays a core role as a "next-generation metal" in both the green energy transition and digital transformation. It enhances the energy conversion efficiency of solar panels, accelerates data processing speeds in data centers, and enables efficient power transmission for electric vehicles. Demand for silver is exploding, from autonomous vehicles to various electronic products supporting AI integration. Furthermore, recent classification of silver as a critical mineral or rare metal by major global economies has further reinforced the market's recognition of its strategic value.
A severe mismatch in fundamental supply and demand is the root cause supporting the strength in silver prices. On the supply side, global silver mine production has stagnated since 2015, with annual supply consistently remaining within a rigid range of 30,000 to 33,000 tonnes in recent years. On the demand side, since 2021, fueled by the boom in industries like photovoltaics (PV), silver demand has continuously outstripped supply. This supply-demand gap has led to the ongoing depletion of above-ground silver inventories.
Market data reveals warning signals of critically low inventories. Global silver stocks suffered a "heavy blow" in 2022, with London vault inventories decreasing by nearly 10,000 tonnes that year. Although subsequent cross-market arbitrage activities led to some silver flowing back, inventory depletion remains alarming, driven by robust industrial demand from PV, new energy vehicles, and AI. Global silver demand for photovoltaics in 2024 grew by approximately 67% compared to 2022. With PV cell production reaching new highs again in 2025, competition for silver on the industrial front will further intensify the tight inventory situation.
Analysts point out that the current performance of the silver market reflects a phenomenon where its commodity attributes are dominating over its financial attributes in this specific phase. Historically, silver fluctuated as a "satellite" to gold, but as its irreplaceable role in new energy and high-tech sectors strengthens, its pricing logic is being reconstructed. Although the short-term gold-to-silver ratio is at a historical low, increasing price volatility risks, considering the low level of global silver inventories and the long-term rigid support from industrial demand, the silver bull market may not be over yet. However, if prices surge further above $100 per ounce, industrial users might respond by increasing inventories or seeking substitute materials, at which point market supply and demand dynamics would face new games of balance.
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