Why silver outpaced gold in the rally, and why it may fall even harder

New Delhi: Gold may be the traditional safe haven, but silver’s recent rally had more moving parts, and that mix is exactly why it tends to swing harder on both sides.

A syndicated The Conversation report described silver as a metal with a “split personality”.

It rides the same fear trade as gold in uncertain times, but it also benefits from being a critical industrial input, especially in clean energy and electronics.

The demand story traders latched on to

The report said solar is a big part of the pitch. Every solar panel uses about 20 grams of silver, and the solar industry accounts for nearly 30% of global silver demand.

It also pointed to electric vehicles, stating EVs use around 25–50 grams of silver each, while data-heavy infrastructure and semiconductors add to the broader demand narrative.

Supply is not easy to “switch on”

The same report said the silver market has run a supply deficit for five consecutive years, with consumption exceeding mining output, and highlighted a structural issue – much of the world’s silver is produced as a by-product of other metals, which limits how quickly supply can respond to price.

Retail activity added heat

The report also cited unusually sharp retail participation in silver-linked products.

Tracking activity on Australia’s CommSec platform, it said gold ETF trades rose 47% over the past year, while silver trading activity jumped 1,000% year-on-year, suggesting frequent, small-ticket trades that often show up in momentum moves.

Why that makes silver riskier than it looks

The same report underlined the risk through volatility. It said silver had risen 269% from February 2025 to just before Friday’s drop, and carried 36% annualised volatility, compared with 20% for gold.

In plain terms, the “extra reasons” that help silver surge, industrial demand narratives and tight supply, do not protect you when the trade gets crowded and the market flips. They can, in fact, magnify the swings.

That is why advisers often keep precious metals allocations limited, typically 5-15% of a diversified portfolio, the report said, especially after a straight-line rally.