(Kitco News) - Silver continues to outpace gold as prices steamroll through the global marketplace on their way to $50 an ounce. However, one research firm is warning investors that higher prices could impact the precious metal’s industrial demand, creating some volatility in the market.
Silver has been on an unstoppable rally since the summer, with prices trading solidly above $48 an ounce, up nearly 67% so far this year. Meanwhile, gold prices—moving closer to $4,000 an ounce—are up 50% year-to-date.
The gold/silver ratio is currently trading around 81 points, its lowest level in nearly a year, and remains below its five-year average.
Although silver’s momentum is attracting renewed investor interest, commodity analysts at Metals Focus said that potential investors should keep an eye on industrial consumption, as higher prices could force companies to reduce the amount of metal they use—a process known as thrifting.
The British precious metals research firm said the solar power sector provides a roadmap for what silver demand could look like at $50 an ounce. Silver has been a critical metal in photovoltaic (PV) solar panels.
The solar sector is one of the biggest sources of demand for silver. According to the Silver Institute’s annual World Silver Survey, compiled by Metals Focus, the solar sector is expected to consume 195.7 million tonnes of silver this year, down 1% from record highs seen in 2024.
“Even before the recent price surge, PV manufacturers had made considerable progress in reducing silver usage per watt. The latest rally, however, has added urgency to the pursuit of breakthrough cost-reduction strategies. As technologies continue to evolve and scale up, this could increasingly erode silver demand within the PV sector,” the analysts said.
The analysts noted that evolving technology in the solar sector—and even potential substitution that could eliminate the need for silver—could reduce silver consumption per watt by around 15–20% this year.
Although shifting demand in the industrial sector could create some volatility in silver, Metals Focus does not expect the overall trend to be impacted.
In an interview with Kitco News last month, Philip Newman, Managing Director of the firm, said that industrial demand would have to weaken significantly to impact the current supply and demand imbalance.
Although industrial demand is expected to decline this year—driven in part by persistent economic uncertainty—the market’s projected supply deficit is forecast to reach around 187.6 million ounces, the third-largest deficit on record.
“As momentum continues to build, I expect to see more investment demand to continue to support prices,” Newman said. “ I think silver will continue to see deficits and quite decent deficits for the foreseeable future. Industrial demand will still remain pretty decent.”
Although higher prices could prompt companies to thrift their silver consumption, some analysts note that the sheer growth of the solar sector will continue to drive demand.
While sentiment in the U.S. is shifting in the second half of the year, solar power and energy storage accounted for 82% of new U.S. electricity capacity in the first half of 2025.
