Industrial silver demand has reached record levels in 2025, driven primarily by explosive growth in solar panel manufacturing and electric vehicle production. This structural shift is fundamentally changing the supply-demand dynamics of the silver market.
The Solar Silver Story
Solar photovoltaic (PV) production consumed an estimated 180 million ounces of silver in 2025—a 25% increase year-over-year. Silver's unmatched electrical conductivity makes it essential for solar cell efficiency, with no commercially viable substitute at current technology levels.
China alone added 180 gigawatts of solar capacity in 2025, with global installations exceeding 400 GW for the first time. Each gigawatt of solar capacity requires approximately 25 tonnes of silver.
Electric Vehicle Demand Accelerates
The automotive sector's silver consumption has doubled since 2020, driven by:
- Battery Management Systems: Silver's conductivity and reliability make it crucial for EV electronics
- Electric Contacts: Traditional vehicles use 0.5-0.8 oz of silver; EVs require 1.5-2.0 oz
- Charging Infrastructure: Each fast charger contains significant silver content
With EV sales projected to reach 20 million units globally in 2026, automotive silver demand will continue its upward trajectory.
Supply Constraints Emerge
While demand surges, silver supply faces significant challenges:
- Primary silver mine output has been essentially flat for five years
- 70% of silver is produced as a byproduct of base metal mining
- New mine development requires 10-15 years from discovery to production
- Recycling rates have plateaued at approximately 180 million ounces annually
The Silver Institute projects a supply deficit of 150 million ounces in 2025—the fourth consecutive annual deficit.
Price Implications
The structural supply-demand imbalance has supported silver prices above $55 per ounce, with analysts projecting potential for $70+ by late 2026.
However, silver's dual nature as both industrial commodity and precious metal creates volatility. Economic slowdowns can temporarily reduce industrial demand, creating buying opportunities for long-term investors.
Investment Considerations
Silver offers unique characteristics for precious metals investors:
- Higher volatility: Silver typically moves 2-3x gold in percentage terms
- Industrial fundamentals: Provides exposure to green energy transition
- Gold-silver ratio: Currently at 72:1, historically averages 60:1
- Physical premiums: Strong demand has elevated premiums on physical silver
VAT-Free Silver Storage
UK investors face 20% VAT on domestic silver purchases. Marcellus offers VAT-free silver storage in Switzerland and Singapore, eliminating this significant cost barrier.
Our Swiss-stored silver bars from LBMA refiners provide efficient exposure to the silver market without the tax drag of UK-stored metal.