The price of silver broke a record this week, exceeding $60 an ounce. The white metal has more than doubled in value this year, from about $30 an ounce to over $63 today.
And funds that provide investors with exposure to physical silver, like the iShares Silver Trust (SLV 2.64%), are up with the price of the precious metal. The silver exchange-traded fund (ETF) tracks the silver spot price using silver bullion held in JPMorgan Chase bank vaults in New York and London, and it has soared about 118% so far in 2025.
By contrast, gold, the king of precious metals, is up about 61% this year. Platinum and palladium, the other two commonly recognized precious metals, are up 87% and 68%, respectively.
What's driving silver even higher?
Image source: Getty Images.
Silver has more industrial uses than gold
Like gold, people purchase silver as a hedge against both inflation and recession. But silver has more industrial uses than its yellow counterpart. It's an excellent conductor, so it's become a critical element used in artificial intelligence (AI) data centers and electric vehicles. It's also used in solar cells, batteries, and antibacterial medical equipment.
Partly in response to the need for silver in the massive AI data center buildout, this year the U.S. Department of the Interior added silver, in addition to copper and metallurgical coal, to its list of critical minerals.
As far as investing in silver goes, many analysts remain bullish on it despite the huge price run-up this year. There's been a supply shortage of the metal just as industrial demand has surged, which is certainly a bullish indicator.
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Monetary easing could send silver prices even higher
And the easing cycle the Federal Reserve is now undertaking (it cut its target rate by a quarter of a percentage point this week, the third such cut this year) is also good for silver prices. Looser monetary policy boosts industrial activity and weakens the dollar, which both increases demand for silver as an industrial input and makes it more attractive as a safe-haven investment relative to the greenback.
When precious metals rally, as they are now, the price of silver tends to move more dramatically. That's partly because it's much cheaper than gold -- which now goes for more than $4,280 an ounce -- so it's much more accessible for retail investors.
In my opinion, it's always wise to allocate at least a small part of your portfolio to gold or silver as a hedge against both recession and inflation. Right now -- particularly because of its uses in AI and related infrastructure -- silver looks like the better bet.
