One of the best-performing investments of 2025 wasn't artificial intelligence (AI) stocks. It wasn't semiconductors. It was silver. Yes, a boring gray metal outperformed almost every other financial asset last year.
The iShares Silver Trust (SLV 1.13%) is up another 7% year to date following a 144% gain last year. But it's also more than 30% below its all-time high, prompting questions about whether the rally is over.
The answer to that doesn't depend solely on price action. The economic and geopolitical backdrops are complex right now to say the least. Those dynamics will make the ultimate case as to whether this exchange-traded fund (ETF) is still worth buying.
Source: Getty Images.
Key takeaways
- Silver's rally was supported by industrial demand from solar, electric vehicles, and semiconductors as well as safe haven demand.
- Silver demand is expected to outpace supply for the sixth consecutive year in 2026.
- Prices have moved sharply lower as geopolitical and inflation risks push up interest rates.
- The current pullback presents an attractive risk/reward setup.
Structural demand will be a tailwind
While it often falls under the precious metal category, silver is probably better categorized as an industrial metal. It has practical applications in solar panels, semiconductors, electric vehicles, smartphones, medical devices, and, of course, jewelry. That provides a steady backdrop of demand that's unlikely to go away any time soon.
The AI boom really helped to unlock some of silver's value in 2025. As the global data center build-out continues and companies dedicate hundreds of billions of dollars to building out their own infrastructure, silver will be in high demand for the foreseeable future. That likely keeps in place a durable level of support for silver prices for a while.
Inflation and yields will be a headwind
The global political environment, however, throws some uncertainty into the mix. President Donald Trump's tariff policy over the past year has kept inflation levels sticky. But the Iran war, which has resulted in soaring energy prices, threatens to send inflation rates even higher.
As happened in 2022, when inflation goes higher, interest rates usually follow. Higher yields are a negative for metals because from a fundamental standpoint, higher-yielding fixed income products look comparatively more attractive relative to zero-yielding silver. The Cleveland Federal Reserve is now forecasting a 3.6% annualized inflation rate in April, much higher than the 2.4% rate reported in February.
The potential positive to come out of this argument, however, is that geopolitical tensions are usually temporary phenomena. The Iran war could, in theory, end at any time. When that happens, there will be some time lag to unwind all that has happened, but the markets will likely start pricing in more normalized conditions pretty quickly.
That probably means falling interest rates and higher stock prices. But it probably also gives a boost to silver.
NYSEMKT: SLV
Key Data Points
Is now the time to buy SLV?
The current pullback for silver is probably a good thing. At $120 an ounce, you could argue that almost every possible positive catalyst for silver was getting priced in. An entry point of $75, which is where it's at now, looks much more reasonable.
I think the fundamental case for silver is still strong. The current supply deficit is likely to keep adding support for silver prices. But the structural demand story is even more bullish. When you have the combination of healthy demand and a supply shortage, it's usually the type of scenario that helps push prices higher.
Here's the question: Is there any current value left even at today's lower price? Personally, I'd rather buy a good story at a higher price than a weak story at a bargain price. I think silver falls into the first group.
I believe that the recent correction has knocked some of the excess out of silver's price, and now is a much more attractive entry point. Based on the long-term narrative, I'd be a buyer of the iShares Silver Trust.
