Silver has long played second fiddle to gold in the precious metals market, but in 2025, it decisively stole the spotlight. After a year marked by breathtaking rallies, record highs, and wild swings, silver prices tumbled sharply on December 29, 2025, leaving investors and analysts scrambling to explain the sudden reversal. The story behind this dramatic turn is as much about global economics and geopolitics as it is about supply, demand, and the quirks of financial markets.
According to Reuters, spot silver slid 4.8% to $75.32 per ounce on December 29, retreating from an all-time high of $83.62 reached earlier that day. The drop came after an extraordinary run: silver prices had surged above $80 per troy ounce at the end of December, nearly tripling in value from a year earlier, as reported by FXStreet and The Economic Times. In India, the rally was even more pronounced, with silver delivering returns of nearly 175% in 2025 and hitting a record ₹2,54,174 per kilogram on the Multi Commodity Exchange (MCX) before falling back over 8% during the same session, Mint noted.
Gold, platinum, and palladium—silver’s frequent companions in the precious metals club—also experienced sharp reversals. Spot gold prices were down 1.4% at $4,470.56 per ounce after hitting a record high of $4,549.71 on December 26, while platinum and palladium saw even steeper declines. Spot platinum dropped 6% to $2,305.15 per ounce after rising to an all-time high of $2,478.50, and palladium plunged 13.2% to $1,669.11 per ounce, according to Reuters. Copper futures weren’t spared either, falling 4.3% to $5.59 per pound, as reported by Investing.com.
What triggered the sudden drop after such a feverish climb? Analysts across the board cited profit-taking as the primary culprit. Ricardo Evangelista, an analyst at ActivTrades, told Reuters, “This morning’s (gold) price decline, which follows record highs, is attributable mainly to traders taking profits ahead of the year-end.” The sentiment was echoed by KCM Trade Chief Market Analyst Tim Waterer, who said, “A combination of profit-taking and seemingly productive talks between Trump and Zelensky regarding a potential peace deal have put gold, silver on the back foot,” in a quote provided by Mint.
Indeed, geopolitics played a starring role in both the rally and the reversal. US President Donald Trump announced on December 28 that he and Ukrainian President Volodymyr Zelenskiy were “getting a lot closer, maybe very close” to an agreement to end the war in Ukraine, as reported by Reuters and Mint. This glimmer of hope for peace eased some of the safe-haven demand that had propelled precious metals to dizzying heights throughout the year.
But the 2025 surge in silver was about more than just global uncertainty. Structural factors in the silver market created a perfect storm for price appreciation. Silver has been in a structural deficit for seven years, largely because it is produced as a by-product of other metals like copper, lead, and zinc. As Mint explained, a rally in silver prices does not automatically lead to higher production, which means supply remained tight even as demand soared. The deficit was compounded by China’s announcement on October 30, 2025, that it would restrict silver exports starting January 1, 2026, through a new state licensing mechanism. China, which refines about two-thirds of the world’s silver supply, is also its largest consumer, so any move to tighten exports can send ripples through global markets. “China sits at the center of global silver refining, and when the world's top refiner starts tightening the valve, downstream users feel it immediately,” Stephen Innes of SPI Asset Management told Mint.
Industrial demand for silver skyrocketed in 2025, fueled by the green energy transition and booming electronics sectors. Silver is essential for solar panels, electric vehicles, semiconductors, and a host of high-tech applications. As Mint reported, increased adoption of solar energy, renewable rollouts, and the growth of electric vehicles all contributed to surging demand. Ravinder Sharma, Senior Commodity Research Analyst at SMC Global Securities, observed, “Physical inventories across major trading hubs such as London and the COMEX have declined meaningfully, and expectations that China may curb silver exports from early 2026 could further tighten global availability. Industrial demand remains another powerful driver.”
Monetary policy was another key factor. The US Federal Reserve’s shift toward easier policy, with markets pricing in two rate cuts for 2026, made non-yielding assets like silver and gold more attractive. Softer US monetary policy, a weaker dollar, and robust central bank purchases all played their part in supporting bullion, which rose about 72% in 2025, according to Reuters and Investing.com. The Gold/Silver ratio, which measures how many ounces of silver are needed to buy one ounce of gold, compressed significantly in 2025—reaching approximately 60, down from historical levels around 90. This indicated strong outperformance by silver, with some analysts suggesting that further normalization could drive prices even higher. “If the gold-silver ratio... continues to move toward historical super-cycle levels of 30:1 to 40:1, a move toward $100 becomes mathematically plausible,” said Sharma.
Market mechanics added fuel to the fire. The US-based CME Group raised the margin required to trade silver futures to $25,000 per contract effective December 29, up from $20,000, a move that likely contributed to the day’s volatility by forcing some traders to liquidate positions. Meanwhile, Indian retail investors witnessed the sharpest intraday swings of the year in silver-exchange traded funds, as prices reacted to both the CME’s margin hike and China’s looming export restrictions.
Despite the sharp correction, experts remain bullish on silver’s long-term prospects. “Silver is well-poised to touch the $100 mark in the coming year,” Sharma told Mint. Aksha Kamboj, Vice President for India Bullion and Jewellers Association, added, “The role of silver is not only as a hedge tool in an unstable economic scenario but also a key industrial metal in today's energy transformation landscape, which cannot be undermined. If such factors continue, the price may very well touch the triple digits in 2026.”
Still, with such wild price swings, volatility is the name of the game. As Mint cautioned, “The excessive price volatility can lead to meaningful correction as has happened in previous market crash of Silver.” For now, silver’s story is one of surging demand, tight supply, and a market on edge—where every geopolitical headline or policy shift can spark dramatic moves. Investors, it seems, will have to buckle up for more turbulence as 2026 approaches.
