Supply deficit and ETF inflows drive silver prices higher

In December, the silver market recorded strong gains as multiple supportive factors converged, spanning supply-demand fundamentals and investor sentiment.

Notably, the market is set to enter its fifth consecutive year of supply deficit, amid a sharp rise in retail investment demand for silver, particularly through exchange-traded funds (ETFs).

In December alone, large capital inflows poured into silver ETFs, leading to substantial accumulation of the precious metal in global vaults and further exacerbating supply tightness.

By the end of 2025, the global silver market had posted growth of over 100%, with spot silver prices surging nearly 150%. This performance underscored silver’s increasingly prominent role as a hedge asset amid heightened global economic and political uncertainty.

In Vietnam, domestic silver prices at times exceeded VND 82 million per kilogram before closing the year at around VND 74 million per kilogram, confirming a year-on-year increase of more than 141%, broadly in line with global trends.

From a trade perspective, the UN Conference on Trade and Development (UNCTAD) estimated that total global trade in 2025 would surpass USD 35 trillion, up about 7% from 2024. Meanwhile, silver inventories held by major ETFs continued to rise, with the iShares Silver Trust (SLV) increasing by more than 833 tonnes and the PSLV fund adding over 189 tonnes in December.

Silver market outlook for 2026

Recent macroeconomic developments have further reinforced silver’s upward momentum. The FED continued its easing cycle with a 0.25% interest rate cut in December, while the US unemployment rate unexpectedly rose to 4.6%.

The Bank of Japan’s interest rate hike highlighted growing divergence in global monetary policies, raising expectations of further easing phases ahead, an environment that is typically supportive of precious metals.

At the same time, geopolitical tensions have continued to escalate across several regions, including Venezuela, Ukraine, the Middle East and the Taiwan Strait. These developments have heightened risk-averse sentiment, prompting capital flows into safe-haven assets, including silver.

Silver market data for December showed sharp declines in inventories in both China and the US. In particular, silver stocks in Shanghai fell to their lowest level in more than a decade, fueling concerns over global inventory depletion and pushing prices higher.

By the end of 2025, silver inventories in Shanghai stood at 819 tonnes, down 597 tonnes from the start of the year. Silver inventories at Comex dropped by more than 2,500 tonnes from their October peak, with end-year stocks recorded at over 13.9 thousand tonnes.

By contrast, silver inventories held by the London Bullion Market Association (LBMA) rose sharply in November, reaching 27.18 thousand tonnes, up more than 3,600 tonnes from early 2025. This trend reflected strong global demand for physical silver, driving flows back into London vaults, a pattern also confirmed by rising investment demand through ETFs.

Inventories held by silver-backed investment funds increased significantly. Holdings of the iShares Silver Trust (SLV) rose by more than 833 tonnes in December amid strong investor demand. Combined holdings of the world’s two largest silver ETFs, SLV and PSLV, increased by nearly 1,000 tonnes during the month, providing strong upward support for silver prices.

Comex silver prices broke out of a consolidation pattern formed in October and November, surging sharply in December. Following the rally, prices have shown signs of renewed consolidation within the USD 70–80 per ounce range. The upward trend remains well supported after prices tested key support levels. In early trading sessions of the new year, silver prices have shown signs of challenging resistance levels again, driven by intensifying global geopolitical tensions.

For the uptrend to be sustained, further confirmation is needed through stable consolidation phases and healthy corrections. If silver prices hold key support zones, 2026 is expected to remain a positive year for the metal.

Commenting on the market outlook, Nguyen Khanh Long, Head of precious metals market analysis at Phu Quy Gold and Silver Group, said that in the medium term, the silver market is likely to face strong volatility amid an uncertain macroeconomic backdrop. Interest rate decisions by the FED, along with changes in its leadership, will be among the most influential factors affecting silver prices from late 2025 to mid-2026.

Global geopolitical uncertainties are also expected to continue weighing on silver prices, as tensions in multiple regions show no signs of easing. In the longer term, silver prices may continue to trend higher as supply is projected to remain insufficient to meet demand in 2025. Additional supply-demand data in early 2026 will help provide a clearer picture of the market.

Silver enters 2026 with a positive outlook as the market records a fifth consecutive year of supply deficit, sharply declining global inventories, rising ETF inflows and sustained demand for hedge assets.