Silver’s shiny comeback has room to run
Wed June 11 2025
Silver has quietly been on a tear this year. Up 26% so far in 2025, the metal is now starting to catch the eye of investors who usually give it a passing glance in favour of gold. But UBS thinks the move has more room to run.
What’s driving it? Partly the search for a cheaper alternative to gold. At over $3,300 per ounce, gold is a heavyweight investment.
Silver, trading at $36.44, offers a more affordable way to get exposure to precious metals, especially in a world where investors are looking for hedges against a weaker US dollar.
UBS sees silver hitting $38 an ounce by the end of the year, possibly even pushing towards $40 if the dollar softens further.
Importantly, silver’s market is far smaller than gold’s, so even modest inflows from ETFs or retail investors can shift prices significantly. So far this year, ETF holdings have already risen by more than 35 million ounces.
There’s also a technical angle. The white metal recently broke through the $34.60 resistance level, drawing in momentum traders. Meanwhile, speculative futures positions have grown steadily, indicating strong sentiment behind the rally.
Industrial demand isn’t expected to jump in the short term, but that might not matter. Structural support from sectors like green energy and AI-related electronics is keeping the supply-demand balance tight.
The market is set for its fifth straight annual deficit, with demand projected at 1.2 billion ounces against supply of 1.05 billion.
While silver can’t rely on central banks the way gold can (it’s not a reserve asset). And that’s not the point right now. Investors are more willing to take on risk as rate cuts come into view, and silver tends to perform well in reflationary environments.
UBS also sees opportunity in options markets. Selling downside puts on silver, for instance, could be a way to pick up yield in a market where the trend remains positive.
Bottom line? Silver’s rally isn’t just about riding gold’s coattails. There’s a genuine investment case here, and with prices still well below previous highs, it might be a good time to pay attention.
Source: https://www.proactiveinvestors.co.uk/