Four-Year Supply Deficit & Green Tech Demand Signal Strong Silver Investment Fundamentals for 2025

• Silver market recorded its fourth consecutive structural deficit in 2024 (148.9 Moz), with industrial demand reaching a record 680.5 million ounces driven primarily by green economy applications.
• Major producers reported strong Q1 2025 results benefitting from silver's market strengthening position in the market.
• Silver prices have shown volatility but overall strength, rising 18% in Q1 2025 to $34/oz before settling around $32.50 in early May 2025.
• New industrial applications continue to emerge in ethylene oxide production, agricultural protection, and healthcare, expanding silver's demand beyond traditional uses.
• The market is expected to remain in deficit for a fifth consecutive year in 2025 despite projected 1.5% increase in total supply, creating a favorable fundamental outlook for silver prices.

Silver continues to demonstrate its unique position as both a precious metal with monetary value and an industrial metal with expanding applications. On the recent market movements, the silver market is experiencing significant structural imbalances alongside record industrial demand, creating potential opportunities for investors. The metal's critical applications in renewable energy, electronics, and healthcare, combined with ongoing supply constraints, have created market conditions worth examining for potential investment.

Record Industrial Demand

Silver industrial demand rose 4% in 2024 to 680.5 million ounces (Moz), posting another record high for the fourth consecutive year, according to the World Silver Survey 2025 as published by the Silver Institute. This substantial demand has outpaced global silver supply, resulting in a structural market deficit of 148.9 Moz in 2024, the fourth consecutive annual deficit. Notably, during 2021-2024, the combined deficit reached 678 Moz, the equivalent of 10 months of global mine supply in 2024.

The persistent deficit indicates a fundamental supply-demand imbalance that could support silver prices over the medium term. Last year's record industrial demand mainly came from applications in the green economy, specifically electric and telecommunications grid infrastructure, electric vehicles and charging stations, photovoltaics and end uses stemming from artificial intelligence (AI), all of which drove growth in consumer electronics shipments.

Regional demand trends show China accounted for the largest worldwide share of industrial demand with a 7% rise, while India was up 4%. In the West, industrial demand in Europe was generally weak (barring one-off gains in the UK), while US demand fell 6% last year.

Metal Dynamics

Price Performance

Silver prices have shown significant volatility but demonstrated overall strength in recent periods. Last year the silver price saw a 21% intra-year increase and an impressive 59% trough-to-peak rally, while the annual price average rose by over a fifth to its highest since 2012 to $28.27 for 2024.

More recently, through the first quarter of 2025, the silver price rose 18%, hitting $34 an ounce amid rising geopolitical and economic uncertainties in mid-March.

As of early May 2025, silver was trading near $32.50, experiencing some pullback. According to recent analysis, silver price dips below 50-day MA at $32.65, turning this level into immediate resistance for any near-term rally. Short-term pressure on silver prices has been partly attributed to dollar strength, as Dollar strength, driven by yen weakness and BoJ dovishness, continues to weigh heavily on the silver market outlook.

Looking forward, the total silver demand this year is projected to fall slightly to 1.15 billion ounces with industrial demand remaining flat, however coin and bar demand in some Western markets should experience a modest recovery. Total silver supply is forecast to increase by 1.5 percent led by higher mine production. Even so, the silver market is expected to remain in a structural market deficit marking the fifth consecutive year.

Silver's Evolving Industrial Applications

Beyond traditional uses, silver continues to find new applications in emerging technologies. Silver and nickel may hold key to producing ethylene oxide without toxic chemicals - a development that could have significant environmental and economic implications, as "if industry does try this out, and they find it to be useful and are able to commercialize it, the twin benefits are you can save a lot of carbon dioxide and a lot of money at the same time," said Tulane University chemical engineer Matthew Montemore.

In agriculture, silver nanoparticles are being studied for their ability to prevent mold in tomato plants:

"Silver nanoparticles are attracting momentous attention from scientific groups and industry because of their immense potential. Silver nanoparticles are one of the extensively explored nanoagents because of their broad-spectrum anti-microbial properties and robust inhibition against agriculture pests and pathogens."

Healthcare applications continue to expand as well, with Indian scientists developing a silver wire network on a stretchable material that can sense strain and accompanying pain and then respond with electrical pulses much like how nerves operate to produce a wearable device that can help doctors detect stress and pain early before it becomes chronic or untreatable.

Supply Performance

On the supply side, global silver mine production was largely flat year-over-year, rising marginally by less than 1% to 819.7 Moz in 2024. Silver production from lead/zinc mines remained the dominant source of silver. Mexico remained the leading silver mine-producing country, followed by China, Peru, Bolivia, and Chile.

Secondary supply sources showed some improvement, with recycling rising 6% in 2024, reaching 193.9 Moz. Industrial scrap saw the most significant increase in weight terms, mainly led by the processing of spent silver catalysts used to produce ethylene oxide. This increase in recycling, while helpful, was insufficient to offset the overall market deficit.

Strong Production Results

Major silver producers have reported strong operational results for early 2025.

First Majestic Silver, a leading producer with operations in Mexico, announces that total production in the first quarter of 2025 from the company's four producing underground mines in Mexico, reached 7.7 million silver equivalent ("AgEq") ounces. Produced metal consists of 3.7 million silver ounces, 36,469 gold ounces, 12.5 million pounds of zinc and 7.5 million pounds of lead.

The company's CEO, Keith Neumeyer, highlighted the significance of the company results and its record silver production in a news release:

"The first quarter of 2025 is paving the way for a transformational 2025 for First Majestic. Our team continues to focus on safe production across all our operations, and I am pleased to see another record safety performance combined with an all-time record for silver production this quarter."

First Majestic's production increase was primarily driven by the inclusion of a new asset, included 1.4 million ounces of attributable silver production from Cerro Los Gatos as well as a notable 17% (0.2 million ounce) increase at San Dimas primarily due to operational improvements.

Santacruz Silver ended 2024 with a total silver production of 6,718,381 oz from its Bolivar mine, Porco mine, Caballo Blanco, and the San Lucas, all located in Bolivia, and the Zimapan mine located in Mexico.

Arturo Préstamo, Executive Chairman and CEO of Santacruz, commented:

"The growth in silver output and favorable market dynamics in silver prices have significantly strengthened our revenue-generating ability. These results underscore Santacruz’s unwavering focus on optimizing our processes and mining operations across all our producing assets. Looking ahead, we believe that solid production levels will provide a strong platform for continued value creation as we move into 2025.”

Exploration & Development Projects

Junior mining companies are advancing promising silver projects. Cerro de Pasco Resources recently announced impressive drill results from its tailings project in Peru. The 40-hole drilling campaign, comprising assays over a 300 x 1,000-meter area, has confirmed high-grade intersections of silver (Ag), zinc (Zn), lead (Pb), copper (Cu), and gold (Au), while also revealing significant concentrations of gallium (Ga), a critical metal with growing strategic importance due to recent geopolitical developments.

The company's CEO emphasized the significance of these findings:

"We are thrilled with the assay results, which not only confirm the high-grade nature of the Quiulacocha Tailings but also highlight significant gallium concentrations - a critical metal with rising global demand," said Guy Goulet, CEO of Cerro de Pasco. The consistency of silver, zinc, and lead mineralization, coupled with the potential for valuable by-products like gallium and pyrite, position this project as a cornerstone of our portfolio."

Meanwhile, Vizsla Silver is progressing with its flagship Panuco project and strengthening its financial position. Vizsla Silver Corp. announced today that it has updated its previously-announced at-the-market equity program (ATM proigram) to offer and sell up to US$200 million of common shares of the company to the public, from time to time, through the Agents.

According to Michael Konnert, President and CEO, "Vizsla Silver remains well-positioned to advance Panuco towards development. The updated at-the-market equity plan simply provides additional optionality to add to a strong balance sheet, as we continue to de-risk the Panuco Project and deliver on development milestones."

Silvercorp announced its construction plan to develop its El Domo project targeting it to be into production by the end of 2026. With an estimated cost of $240.5 million, Silvercorp is focusing on advanced detail engineering, infrastructure, and materials balance. The company has also sourced diesel power generators as standby and emergency power to satisfy Ecuador market conditions. Currently the engineering work for the power line construction and selecting contractors is ongoing which is expected to be initiated in May 2025 and completed in 13-17 months.

The Investment Thesis for Silver

• Persistent Structural Deficits: The silver market has experienced four consecutive years of supply deficits, with 2024 seeing a 148.9 million ounce shortfall. With 2025 projected to be the fifth consecutive deficit year despite increased mine production, this fundamental imbalance could provide long-term price support.
• Green Energy Transition: Silver's critical role in solar panels, electric vehicles, and grid infrastructure positions it to benefit from ongoing global decarbonization efforts. Photovoltaic demand reached 197.6 million ounces in 2024 and continues to grow as countries expand renewable energy capacity.
• Industrial Demand Growth: Industrial applications now consume over 680 million ounces annually, with new uses in healthcare, agriculture, and chemical production continuously emerging. Industries dependent on silver's unique properties create a solid demand floor regardless of investment trends.
• Portfolio Diversification: Silver offers both precious metal stability and industrial growth exposure, providing a hedge against inflation while capturing upside from technological advancement. Its historically high volatility offers greater potential returns than gold during bull markets.
• Actionable Strategy: Consider allocating 5-10% of a diversified portfolio to silver through a combination of physical bullion for wealth preservation and quality mining stocks for operational leverage. Look for producers with strong balance sheets, growing production profiles, and exploration upside.

The silver market presents a compelling investment thesis based on fundamental supply-demand imbalances that persist despite price increases. With global silver deficits totaling 678 million ounces over the past four years - equivalent to 10 months of annual production - the market structure supports the potential for sustained higher prices. Record industrial demand driven by green technology adoption provides a growing consumption base, while limited production growth constrains supply. Major producers are reporting strong operational results, with many mining companies well-positioned to benefit from the favorable market dynamics.

While short-term price movements remain subject to macroeconomic factors like dollar strength and interest rate policies, silver's dual role as both precious metal and industrial commodity offers investors unique exposure to multiple economic trends. Given the ongoing structural deficits forecasted to continue through 2025, combined with expanding industrial applications and limited new mine supply, silver represents an intriguing opportunity for investors seeking both portfolio diversification and exposure to technological and environmental megatrends.