Tariffs Jolt Silver Prices While Global Deficit Shrinks but Persists into a Fifth Year
Silver’s Fifth Straight Shortfall, Shrinking but Still Stubborn: Inside the Metal Market’s Most Watched Tug‑of‑War
A jittery April price crash gave way to an equally violent rebound. Beneath the whiplash, the world’s silver users face yet another year where demand outruns supply—just not by quite as much.
A 22 Percent Plunge, Then a Snap‑Back
The first two weeks of April were enough to make veterans of the silver trade reach for motion‑sickness pills. Minutes after Washington’s broad new import duties were published on April 2, silver futures tumbled from $35.60 an ounce to $27.80, their sharpest eleven‑day slide since the pandemic panic of 2020. By mid‑month, exemptions for smartphones and semiconductors had clawed half that loss back.
“Every tariff headline now moves the metal faster than any macro data release,” said the head of base‑metals trading at a European investment bank who asked not to be named because he is not authorized to speak publicly. “But underneath the noise, the stockpiles keep falling, and that’s what matters to our models.”
That underlying tension—thin inventories colliding with policy‑driven volatility—frames the World Silver Institute’s 2025 outlook, released this week with consultancy Metals Focus. The headline number is deceptively soothing: the global deficit is expected to narrow 21 percent to 117.6 million ounces. Look closer, analysts warn, and the market’s structural tightness still looms.
The Numbers Behind the Deficit
| 2024 | 2025 Forecast | % Change | |
|---|---|---|---|
| Total Supply | 1.03–1.05 billion oz | ≈ 1.05 billion oz | +2 – 3 % |
| Mine Production | ~835 million oz | 844 million oz | +2 % |
| Recycling | 193.2 million oz | > 200 million oz | +5 % |
| Total Demand | 1.164–1.200 billion oz | 1.148–1.200 billion oz | –1 % |
| Industrial Demand | 680.5 million oz | ~700 million oz | flat to +3 % |
| Global Market Deficit | 148.9 million oz | 117.6 million oz | –21 % |
Inventories in London and New York have already surrendered 678 million ounces over the past four years—roughly ten months of 2024 mine supply—and registered COMEX stocks hover near multi‑year lows. “You can’t print silver,” a North American refiner quipped in an interview. “You dig it or recycle it, and neither is keeping up.”
Where the Extra Ounces Are (and Aren’t) Coming From
Mine Expansions Help—Barely
Fresh tonnage from Pan American Silver’s La Colorada skarn in Mexico, Aya Gold & Silver’s Zgounder expansion in Morocco and Hecla’s ramp‑up at Keno Hill in Canada adds only about 25 million ounces—less than 3 percent of global output. With 72 percent of silver still produced as a by‑product of copper, lead and zinc, miners cannot simply flip a switch when prices rise.
A senior engineer at a major Latin American polymetallic mine, speaking on condition of anonymity, put it bluntly: “Our shareholders care about copper first. Silver grades are falling, and unless copper jumps, we won’t chase marginal veins.”
Scrap Rallies on Catalyst Change‑Outs
Recycling does the heavy lifting in 2025, topping 200 million ounces for the first time since 2012 as ethylene‑oxide catalysts—used to make polyester and antifreeze—hit their two‑ to three‑year replacement cycle. Metals Focus flags this surge as a one‑off; flows should fade after next year, pointing back to the structural supply gap.
Demand: The Green Economy Refuses to Let Go
Solar, AI and the Electrified Car
Industrial uses—which already swallow 60 percent of all silver—show no sign of retreat. New TOPCon solar cells require roughly 30 percent more silver paste than the PERC technology they replace. At a projected 600 gigawatts of global solar installs, that is nearly 193 million ounces—18 percent of world demand on its own.
Add 5G base‑stations, high‑speed data centers feeding artificial‑intelligence workloads, and ever‑denser automotive wiring harnesses, and Metals Focus calculates that each 1 percent increase in electronics output lifts silver demand by 0.7 percent.
Jewelry and Silverware Feel the Price Pinch
In contrast, India’s stomach for silver bangles has turned queasy. A weak rupee and steep domestic prices are set to drag jewelry demand down 6 percent and silverware 16 percent. Chinese consumers, coping with a fragile property market, remain cautious. Western retailers, however, report a subtle shift from gold to silver pieces as shoppers seek smaller ticket sizes.
Coins and Bars: Bargain Hunters Return
After a bruising 22 percent slide in 2024, coin and bar purchases are forecast to rebound 7 percent. “There’s a $29 floor in the American mind,” observed a bullion‑dealer executive in Texas. “Under that number, orders light up our screens.”
Tariffs: A Wild Card With Teeth
Silver, straddling industry and finance, reacts to trade policy far faster than gold. April’s duties crushed prices in days, yet exemptions for high‑end electronics reversed the rout almost as quickly. Supply‑chain managers at several Asian smartphone assemblers confirmed they had built strategic stockpiles in March, anticipating disruption.
Premiums on six‑month forward contracts in New York briefly spiked to 3 percent over spot, signaling that users prefer to lock in metal rather than risk another policy shock later in the year. Market veterans warn the pattern may repeat through the U.S. election cycle.
What It Means for Traders and Portfolio Managers
- Volatility, Not Direction, Is the Gift. Persistent physical shortages set a rising floor, but tariff headlines can lop 20 percent off the price on short notice.
- Watch COMEX Registered Stocks. If inventories slip below 70 million ounces—about eight weeks of U.S. industrial demand—expect a backwardation flare‑up.
- Pair Trades Beat Naked Bets. Several macro desks have married long‑silver positions with copper shorts, wagering that silver’s dual nature cushions downside better than base metals in a tariff war.
- Recycling Growth Is Finite. Ethylene‑oxide catalyst scrap peaks this year; without a breakthrough in solar‑paste recovery, the supply cushion deflates in 2026.
Possible Futures: Three Scenarios
| Scenario | Probability | Year‑End Price | Key Triggers |
|---|---|---|---|
| Base Case | 55 % | $29 – $36 /oz | Modest Fed easing offsets tariff drags; deficit persists |
| Bull Case | 30 % | > $40 /oz | Trade truce, faster EV/PV build‑out, inventories break below 20 kt in London |
| Bear Case | 15 % | $24 /oz | Global recession forces industrial demand contraction; copper‑paste leap trims solar use |
Beyond 2025: The Questions No One Has Answered
- Can copper metallization truly displace silver in mass‑produced solar cells before 2027? Lab results look promising, but scaling remains uncertain.
- Will Beijing rebuild a strategic silver reserve? A 2,000‑tonne state purchase would tighten free float by roughly 7 percent.
- How long can recyclers rely on chemical catalysts? Players are already scouting spent photovoltaic paste and electronic scrap as the next frontier.
The Bottom Line
The deficit is shrinking, not disappearing. Mine expansions and a scrap‑metal windfall buy the market breathing room, yet inventories keep eroding and green‑tech appetite shows no sign of dieting. For traders, that means a landscape of unusually wide price arcs tethered to an upward‑sloping floor—a playground for volatility strategies, but a headache for anyone who actually needs the metal delivered on time.
As the anonymous European trader put it, “Tariffs make the price chart scream, but lack of ounces is the quiet force you ignore at your peril.”