As Silver climbed above USD 80 an ounce recently, supported by supply constraints, strong industrial demand, and bets on further interest rate cuts in the United States, an interesting take came from Tesla and X (formerly Twitter) boss Elon Musk, as he commented, “This is not good. Silver is needed in many industrial processes.”
The metal gets used in activities like electrification, construction of solar power panels, electric vehicles and data centres, all areas in which demand has been rising, eating into inventories. Tony Sycamore, a market analyst at IG, said a “generational bubble” was playing out in silver, as more capital was drawn into the precious metals market.
“The rally in precious metals has been supported by expectations of multiple Fed rate cuts in 2026, alongside robust central bank and private investor buying. However, the dominant driver of late has been a severe structural supply-demand imbalance in silver, sparking a scramble for physical metal,” Sycamore said.
Commenting on the silver price rise, media outlet Bloomberg stated, “Much of the world’s readily available silver is sitting in New York awaiting the outcome of a US Commerce Department investigation into whether imports of critical minerals pose a national security risk. The review could pave the way for tariffs or other trade curbs on the metal.”
On December 29, it seemed like gold and silver were on track for their best years since 1979. Gold rose by more than 70% in 2025 to more than USD 4,500 an ounce, up from USD 2,623 at the start of the year. Spot platinum rose 5.3% on December 26 to USD 2,338.20 an ounce, in its strongest weekly rise on record. Both platinum and palladium, which are key components in automotive catalytic converters, have surged due to tight supply, tariff uncertainty, and rotation from gold investment demand, with platinum up roughly 170% in 2025.
Silver also has a role as a monetary metal – a store of value. However, Elon Musk’s warning looks more on the manufacturing side, as a price surge may end up with manufacturers suffering the consequences.
As per the industry estimates, battery electric vehicles (BEVs), like Teslas, typically use about 25–50 grams of silver per car. This is roughly 0.8–1.6 troy ounces per vehicle in electrical contacts, power electronics, and control systems.
The metal has risen sharply during December, part of a rally that also pushed gold and platinum to record levels on Boxing Day. Analysts have attributed the price jump to expectations of interest rate cuts by the Federal Reserve in 2026, leading to increased demand for hard assets that protect against inflation and currency debasement.
Also, China has imposed new restrictions on silver exports, which will begin on 1st January. The move has further created supply-related fears, while geopolitical worries have lifted demand for safe-haven assets. Under the new rules, companies must secure licenses from the Xi Jinping government to export the metal, with eligibility limited to state-approved firms producing at least 80 tonnes annually, apart from holding USD 30 million in credit lines.
This move, as per the analysts, effectively blocks small and mid-sized exporters, reducing international supply almost overnight. According to Statista, global silver supply stands at around 1 billion ounces. Analysts estimate that supply deficits of 115 million to 120 million ounces in 2025 are straining global inventories, as mine production fails to meet consumption for a fifth consecutive year. Silver’s total market capitalisation has now crossed USD 4 trillion, fuelled by a short squeeze in October and renewed safe-haven demand amid global rate cuts and geopolitical tensions.