Silver Could Hit $40 by Year-End
The gold-to-silver ratio has surged to levels not seen in decades, grabbing the attention of precious metals investors across the globe. In May 2025, the ratio stood at over 103:1, one of the widest in modern financial history, with gold trading above $3,400 per ounce and silver lingering below $33. This yawning gap raises critical questions: Why has silver lagged so dramatically, and could it be poised to outperform gold in the months ahead?
The Historic Gap Between Gold and Silver
Historically, the ratio has averaged around 55:1, but the divergence in May exceeded even the panic levels seen during COVID-19 or the Great Depression. In geological terms, gold is roughly 8-10 times scarcer than silver, yet the market price suggests it is worth over 100 times more. This contradiction points to factors beyond simple supply and demand.
Several influences have created this imbalance, including macroeconomic fears, monetary policy uncertainty, and changing investor preferences. While gold has surged on safe-haven buying and central bank accumulation, silver’s industrial exposure has made it more vulnerable to global economic tremors.
Why Gold Has Outperformed Silver So Far
Gold's dominant performance in 2025 has been partly the result of relentless central bank buying. In 2023 alone, central banks purchased over 1,100 tonnes of gold, reinforcing its status as a strategic monetary asset. Silver, on the other hand, no longer plays a significant role in sovereign reserves, leaving it exposed to industrial and speculative forces.
Investor psychology also favours gold during turbulent times. As a proven store of value, gold typically responds more directly to economic uncertainty, currency devaluation, and geopolitical risk. It has a stronger inverse correlation with the U.S. dollar than silver, meaning it benefits more directly from dollar weakness.
The gap in investor infrastructure also plays a role. Gold-backed ETFs manage more than $230 billion in assets, compared to less than $20 billion for silver ETFs. This imbalance limits institutional participation in silver and adds to its relative underperformance.
Economic Headwinds and the Tariff Effect on Silver
Recent tariff announcements by the U.S. government have added further pressure to silver. President Trump’s plans for universal import tariffs, rattled global trade expectations. For a metal with heavy industrial use in electronics, solar panels, and electric vehicles, this disruption posed a near-term challenge. While gold benefited as a non-industrial safe haven, silver’s economic sensitivity weighed on its performance.
Silver’s identity as industrial metal means it can struggle during economic slowdowns even as gold thrives. However, this same industrial demand could be a powerful tailwind once economic momentum stabilizes.
Source: TradingView
The Case for Silver Outperformance in 2025
Despite recent setbacks, silver may be on the verge of a reversal. Historically, when the gold-to-silver ratio exceeds 90:1, silver has a strong track record of outperforming gold within the following three years.
The ratio reached 103 in May 2025, suggesting an extreme level of silver undervaluation. In past cycles, such extremes have rarely lasted long. If the ratio reverts to its long-term average of 50 to 70, silver prices could see dramatic upside, even without gold moving significantly higher.
Moreover, the supply-demand fundamentals for silver are tightening. For the fourth consecutive year, the global silver market is running a deficit. In 2025, projected demand of 1.148 billion ounces is set to outpace supply of just 1.031 billion ounces. This imbalance, driven by growing industrial demand and limited new mining output, strengthens the case for a supply-driven price rally.
After the gold-to-silver ratio hit historic extremes in May, silver staged a sharp comeback in June 2025, climbing more than 9% as bullish sentiment returned. The key resistance level of $35 has been broken decisively, suggesting that a new up trend is starting. From a technical analysis perspective, the first potential upside target based on the breakout is $40; however, over the long-term levels to $50 appear feasible. Whie in the short-term, silver may experience a pull back as momentum indicators have reached overbought levels, such potential pull back is seen as constructive and merely unwinding silver’s current overbought momentum conditions.
Silver is Undervalued and Overlooked but Might Start Catching Up to Gold
Silver’s underperformance over the past few years signals we’re still in the early stages of the current precious metals bull market. Historically, silver tends to outperform during the latter stages of a gold-led rally. A conservative return to the 70:1 ratio would put silver near $70, more than double current levels.
The contrarian case is compelling. With gold at record highs and silver historically cheap by comparison, the setup for a catch-up trade in silver in the next few years is strong. If economic fears stabilize and industrial activity resumes, silver may begin to reflect both its monetary and industrial value more fully.
A Strategic Opportunity for Long-Term Investors
While gold continues to shine under central bank support and safe-haven demand, silver now stands out as a high-risk, high-reward investment. The extreme divergence between the two metals points to silver’s massive upside potential over the long-term.
As historical patterns suggest, silver often lags in the early phases of a bull market before surging ahead. If 2025 continues to unfold with elevated inflation expectations, supply shortages, and growing demand from green technologies, silver could finally reclaim the spotlight it missed in recent months.
Professional investors looking for magnified exposure to silver may consider Leverage Shares +3x Long Silver or -3x Short Silver ETPs.