Silver Prices Soar: A Global Phenomenon with Local Impacts

 BHIMAMMA, A 26-YEAR-OLD househelp in Bengaluru, lost one of her silver anklets last year. This month, when she went to her village for the annual temple festival during Sankranti, she decided it was time to find a replacement. She sold her old anklet and got three times what she had paid, more than recovering the cost of what was lost. But when she went to buy the new pair, she had to pay ₹12,000 extra. As it turns out, she was lucky. Because in the last two weeks, the price of silver has soared by more than 25 per cent. Silver’s performance has been extraordinary in recent times. Peo­ple who fortuitously bought it are celebrating with unexpected bounty, others are regretting. On X, an investor recounted how last year his mother wanted a new silver pooja set and he told her to postpone it because prices had already gone up a lot. He was ruing because on the day of the post, January 20, silver prices had crossed ₹3 lakh per kg. On January 28, it was ₹3.80 lakh per kg.

Much is said about how gold prices have risen but it is nothing compared to what silver has been doing. It has tripled over the last year. This is not just an Indian phenomenon. Worldwide, the metal is witnessing a mania and, while many consider it to be in bubble territory, there are cogent explanations too. The last time silver saw such a steep upswing was in 1980. In 1979, American billionaire brothers, Nelson Bunker Hunt and William Herbert Hunt, cornered almost 30 per cent of the available silver supply. Within a year, global silver prices peaked from $8 per troy ounce to $50. This was on January 18 of that year. Financial institutions and exchanges then acted to curtail margins and use of leverage to buy silver. It led to a correction. By March 1980, silver was back down to $11 per troy ounce. Not only was the bubble short-lived, but the peak price then was never crossed for 45 years. It was only in October of 2025 that silver once again held above the $50 level, bolstered by a 70 per cent boom since the beginning of the year to reach its all-time high. Many thought that it would stabilise or

 correct, but it has rocketed away instead, more than doubling. At present, silver is at $115, and it shows no sign of flagging.

Many factors have come together to lead up to this. There is, first of all, a global shortage of silver that has been building up over time. Even though silver is mined, most of it is produced as a corollary to other metals. In India, for instance, the only com­pany that makes silver is Hindustan Zinc, which primarily mines zinc. Its stock price has now shot up because it has consciously ramped up its silver production given the profits available. There is, however, a limit to silver production and new mines can take years to come up. Demand meanwhile has far outpaced supply, and for that, there is technology to thank.

Silver is clubbed with gold as a precious metal, but it has a dual role of industrial use. In the book, The Story of Silver: How the White Metal Shaped America and the Modern World, William Silber writes, “Governments no longer coin silver as cur­rency but rising industrial demands compete with silversmiths for the available supply of the white metal. Photographic film produced by the camera company Eastman Kodak usually con­sumed more silver in a year than the jewelry industry. Now that digital cameras have made photographic film obsolete (driving Kodak into bankruptcy in 2012), the electronics industry domi­nates commercial uses. Silver, called a noble metal, along with gold and platinum, because it resists corro­sion, is the best conductor of electricity and is used in circuit breakers, switches, fuses, and other electrical components.”

Or take solar energy. It depends on silver because photovoltaic panels are layered with it. As solar energy becomes increas­ingly adopted, so does the demand for the metal. Smartphones, semiconductors, arti­ficial intelligence (AI) infrastructure: prod­ucts essential to the present and future have silver in them but not enough is being made. This phenomenon ties up with another factor, the Donald Trump effect. Ever since the US president instituted his policy of tariffing the rest of the world, all kinds of repercussions have followed for silver. The largest silver mining is in Mexico which is now subject to huge tariffs. The second largest is China, which has 13 per cent of silver production. It consumes a lot of silver being the manufacturing hub of the world. It also does between 60 to 70 per cent of refining of all of the world’s silver. After the tariff policy, the US and China are in a trade war. At the beginning of 2026, China restricted the export of silver, deciding it would control who gets how much silver. A metal essential for modern technologies was now a chess piece for geopolitics between superpowers.

There was one more factor: de-dollarisation. After the sanc­tions against Russia following the Ukraine invasion and the freezing of its foreign reserves, the danger of holding dollars was clear. Many countries, including India and China, reduced their dollars and increased gold reserves. Silver also slowly emerged as a reserve. In addition, with US debt spiralling away, investors are moving from the dollar with silver being a beneficiary. Every time there is uncertainty in the world, gold and silver act as safe havens. When Trump recently threatened to take over Greenland and put a 10 per cent tariff on European allies, there was an immediate rise in the price of silver. It did not go down once the issue was resolved because the world expects such tensions to continue. The silver boom has swept India too. The country imports most of its silver and whatever happens globally gets reflected in the prices here. India needs silver for its manufacturing and retailers are also heavily buying it. Curious impacts are being felt. Kaju katli is a popular Indian sweetmeat. It comes with a silver foil on top and so shops have reduced its quantity or increased the price of the sweet slightly.

For Indians, while the traditional storehouse of value was gold, for those who couldn’t afford it, it was silver. These were your reg­ular households, from villages to towns. But now a new category of Indians is buying silver, not in its physical form, but as units in Exchange Traded Funds (ETFs). These are mutual funds that buy silver in bulk and sell units in paper form. The largest such ETF in India is Nippon Silver ETF, and its performance shows the scale of what has been ongoing. From around ₹3,000 crores in Assets Under Management (AUM) at the beginning of 2024, its AUM is now over ₹28,000 crores. For those who bought its units, the ETF has given a one-year return of over 275 per cent and 70 per cent over three years. Silver ETFs were first launched in India in 2022 and, after a tepid start, investors are now flocking to them. An article in Upstox, the trading platform, said, “Silver is riding a different, more industrial wave. Growing use in solar, electronics and EVs has pushed global silver into a structural deficit, and ETF holdings have responded with rapid accumulation since their 2022 launch in India, where silver ETF AUM has crossed roughly ₹40,000 crore with more than 25 lakh folios.”

Silver has been the best-performing investment asset in recent times, but it is also a double-edged sword. Gold is necessary in one’s portfolio for the stability it brings during downturns. Silver, however, steeply falls during a stock market crash precisely be­cause it is also considered an industrial commodity. When there is an economic recession, manufacturing goes down and so does demand for silver. And historically, it tumbles just as dramatically as it goes up. Early silver investors who have made huge profits still have some protection, but new investors often get in at the end of a bubble and when it bursts, they can be left holding out­sized losses. Silver can then take decades to give returns. After it made a lifetime high in 1980, it almost touched it in 2011 but then again fell, until now when it finally crossed the mark. Those who bought at the 2011 peak had to wait 14 years to just break even. And while they would have felt vindicated, no one really makes an investment expecting a return after a decade and a half. Mean­while, the Indian stock market has been relatively flat, leading to investors turning increasingly to gold and silver. If silver crashes, it could mean a loss they can’t sustain.