In mid-October, the price of silver reached over $50 per troy ounce for the first time, climbing to nearly $59 by the end of November. This represents a doubling of silver’s value since January, nearly matching its best annual growth since 1979. The Gold/Silver ratio has fallen to 72, the lowest level since August 2021. Silver’s price has gained more than gold due to several factors, including increased inflows into silver ETFs tracked by Bloomberg and a local supply shortage. This shortage first appeared in London and later in Shanghai, contributing to a projected supply deficit of 95 million ounces for the year. It is expected that silver prices will align more closely with gold’s, but the tight market conditions will continue to support silver’s price.

Supply Deficit and Industrial Demand

To fix the supply deficit, industrial demand would need to drop significantly, which seems unlikely. There is ongoing demand for silver in products like solar cells and electric vehicles. Future actions by the US Federal Reserve could also benefit silver, with forecasts predicting prices could increase to $59 per troy ounce next year. The Gold/Silver ratio might rise to 75, indicating silver’s performance will become more aligned with gold. Silver has had a remarkable year, nearly doubling in price to almost $59 per ounce. This surge has pushed the Gold/Silver ratio down to 72, a level we haven’t seen since August 2021. However, since the price has risen so much, we believe that silver’s outperformance compared to gold may soon come to an end. The rally since October has been driven by supply shortages in major markets like Shanghai. Prior to this, there were substantial inflows into silver ETFs, totaling around 3,000 tons from June to September 2025, which pushed prices higher. Notably, data from large ETFs indicated a minor outflow last week for the first time in months, suggesting that investor interest may be fading at these high price levels. A major drop in price seems unlikely because the market fundamentals remain tight. A supply deficit of 95 million ounces is expected for this year, backed by strong demand from the solar and electric vehicle sectors. Recent manufacturing data from China confirmed this industrial strength, providing a solid price floor for the future.

Trading Strategies and Future Outlook

We should keep in mind the sharp correction that followed the last significant surge to nearly $50 in April 2011. This serves as a warning for those chasing the current rally. With high implied volatility, traders might consider selling out-of-the-money call options to earn premium, anticipating that the upward momentum will slow down in the coming weeks. This strategy allows traders to profit while not betting on a market crash. Looking forward, the anticipated easing of monetary policy by the U.S. Federal Reserve should support all precious metals. The minutes from the November 2025 FOMC meeting underscored expectations for a rate cut early next year. A possible strategy for the weeks ahead could involve betting on the Gold/Silver ratio, as it is expected to rise back towards 75, by going long on gold and shorting silver. Create your live VT Markets account and start trading now.

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