Precious Metals Not in a Bull Market – What Could Silver Do?

Last year, silver prices climbed from AU$35 per ounce to AU$47, a whopping 34% increase. In 2025, silver is following a similar trajectory, currently sitting at AU$52.50 per ounce, an increase of 12% in less than three months. Gold has seen similar increases, rising 34% in 2024 and 11% in 2025, leaving the XAUXAG ratio barely budging from 88.

Silver investors know that in a precious metals bull market, this ratio declines, as silver traditionally outperforms gold when more investors enter the market. Historically, this ratio has reached 50–70. The supply and demand fundamentals for silver are looking strong, with 2025 marking the fourth consecutive year of supply deficits. If investor interest picks up, this deficit could widen, pushing prices even higher.

Current forecasts estimate silver will reach US$39 per ounce this year. However, if the gold/silver ratio declines or investor demand accelerates, prices could surpass this level. So, if we haven't yet entered a traditional precious metals bull market, what could silver’s potential gains look like? Could 2025 outperform last year?

The Gold/Silver Ratio

In the last two decades silver has experienced three notable bull markets, the Global Financial Crisis, the U.S. Debt Ceiling Crisis, and the COVID-19 Crisis. Each of these periods saw precious metals surge, with the gold/silver ratio falling from highs. During the GFC, the ratio hovered around 45. The 2011 debt crisis saw it plunge to 30.4, and during COVID-19, it dropped to 62.

Chart: 2007-2025 XAUXAG ratio

Arguably right now we are more likely to see a similar debt crisis to 2007 or 2011, if these ratios were reached silver would hit the following levels in USD and AUD.

If the gold/silver ratio were to return to 30, as seen in 2011, silver prices could reach AU$5,000/kg based on current gold prices.

The Market in 2024

Silver gained 20% in USD in 2024, but the weak performance of the Australian dollar caused silver’s gains to be even stronger domestically, surging 34% in AUD terms.

This bullish performance was driven by a supply-demand deficit for the third consecutive year, with silver supply at 1,004 million ounces and demand reaching 1,219 million ounces, creating a 20% deficit.

Chart: 2024 XAGAUD price

Despite this persistent deficit, the gold/silver ratio increased from 85 to 91, a strong indicator that a precious metals bull market had not yet begun.

Chart: 2024 XAUXAG ratio

2025 Demand Deficit

Silver prices have already climbed 13% in 2025 (as of March), and with yet another year of deficit, some analysts forecast silver could hit US$39/oz, representing another 18% gain from today’s price.

Chart: 2025 XAGAUD price

Key Drivers Behind Silver’s Strength:

• U.S. Political Uncertainty under a Trump administration
• Ongoing supply-demand deficits
• Falling bond prices, which tend to support precious metals

Emkay Wealth Management expects silver to perform well, forecasting price targets of US$36.60, US$38.70, and US$39.30.

Their preferred investment horizon is 12–18 months, stating:

“Investing in silver funds with a 12 to 18 months’ time horizon is likely to be a worthy proposition,”

Despite silver’s strong gains, the gold/silver ratio suggests we are not yet in a full bull market. The ratio has declined slightly from 91 to 88 in 2025. Could this be the beginning? Could we eventually see AU$5,000/kg silver?

Watch the Ainslie Insights video discussion of this article here: https://www.youtube.com/watch?v=9IHLB5uyPk8