Since the start of the year, silver prices have risen more than 30%. Real-economy demand from the solar and artificial intelligence (AI) industries, plus investment demand from China and India, has combined to give silver the status of being "more precious than gold." The Chicago Mercantile Exchange (CME) has raised margins four times since late last year to rein in speculators, but the rally has hardly cooled in the face of solid demand. The market expects this silver price rally to continue for the time being.
According to Investing.com on the 22nd, silver futures closed at $94.64 on the 20th (local time), up $6.10 (6.89%) from the previous session. Intraday, they jumped to $95.78. Silver prices have jumped 210% from the beginning of 2025 and have surged more than 30% so far this year.
Along with the sharp price rise, investor money is flowing in quickly. Over the past month, 335.3 billion won flowed into KODEX Silver Futures (H) on a net basis, ranking 10th among domestic ETFs by fund inflows. During this period, the return was 42.76%, overwhelming the returns of other investment assets such as gold.
◇ Chronically undersupplied silver… soaring demand sends prices "sky high"
Structural supply constraints are cited first as the fundamental backdrop for the silver price spike. Silver is a representative inelastic metal for which it is difficult to increase production in the short term even if demand rises. That is because half of total output comes as a byproduct of copper, zinc and lead mines.
According to the Silver Institute, silver supply has been stagnant at about 1 billion ounces annually with little fluctuation from 2016 to 2025, while demand has steadily increased, leading to five consecutive years of supply shortages recently.
With supply constrained, demand expanding at the same time has increased upward pressure on prices, analysts said. In industrial sites that account for more than 50% of silver demand, solar panels (70%) and AI data centers (30%) are sucking in silver like a black hole. Silver is essential for solar panels and power control devices, making it difficult to reduce demand even if prices rise.
On top of that, investment demand is also surging as geopolitical tensions intensify over events such as the arrest of the Venezuelan president, protests in Iran and the Greenland situation. Historically, geopolitical instability has increased demand for safe assets such as gold and silver. This time in particular, as gold prices soared, investment demand shifted to silver, which is relatively less expensive. Investment demand is especially pronounced in China and India.
In addition, China's export controls on silver in Oct. last year and the United States' designation of it as a "critical mineral" in Nov. collided, fueling "panic buying" to secure supplies in advance, analysts said.
◇ CME pulled the "four margin hikes" card… unbroken demand for "silver"
As silver extended its explosive rally, CME responded by raising margin barriers. CME abruptly raised silver futures margins three times on Dec. 12, 29 and 31 last year. As a result, the margin per contract jumped from the $20,000 level to $32,500.
Starting on the 13th, it introduced a proportional margin system that applies about 9% of the contract value instead of a fixed amount. The higher the price rises, the more margin must be posted automatically. While leverage is the key to futures transactions—moving large positions with smaller capital—margin hikes pressure investors' cash. Analysts said investors who cannot meet margin calls may liquidate positions, increasing short-term selling pressure.
Historically in the silver market, individual investors have mainly taken long positions betting on a rise, while global legacy banks such as Barclays, Standard Chartered, BNP Paribas and Deutsche Bank have mainly taken short positions betting on a decline. Because individual investors have less cash capacity than the banking sector, margin increases have added to their funding burden and prompted them to reduce long positions. As a result, margin hikes have acted to curb rapid rises in silver prices.
This time, however, the silver rally has continued even after margin hikes. The market says investor sentiment has not easily weakened because the bullish thesis centered on physical supply and demand is solid. As of Dec. 2025, the size of silver short positions held by major traders is equivalent to about 90 days of global silver production. Accordingly, there is also speculation that some financial institutions have begun unwinding existing short positions.
◇ Experts: "Short-term volatility may increase… focus on demand over the long term"
Experts advise caution about the possibility of expanded volatility in the short term. If the margin hikes and the introduction of proportional margins trigger a wave of short covering (liquidation of short positions) all at once, whipsaw price action could unfold.
However, optimism is dominant that the upward trend in silver prices will not falter in the long term. Samsung Futures recently said silver could rise to $150 by the end of 2026. Citigroup set the three-month silver price at $100 per ounce.
Experts advise that when investing, you should confirm whether demand for physical assets is solid. An industry expert said, "From an industrial perspective, watch the pace of silver price increases relative to solar industry selling prices, and from the investment-demand perspective, pay attention to whether safe-asset demand persists due to geopolitical risks and to the timing of the end of the global rate-cut cycle."