Silver soars, Musk bluntly says: This is not good!

This week, silver first approached $80/ounce, with a rapid surge far exceeding that of gold. On the 27th, Elon Musk expressed concerns, stating that this is "not good for industrial development."

Musk made these remarks on the social media platform X. In response to discussions about the explosive growth in silver prices due to a "severe global supply shortage," Musk commented:

“This is not good. Silver is needed in many industrial processes.”

Analysis indicates that the global silver market has been in a structural deficit for five consecutive years, with physical inventories rapidly depleting and stock levels at major exchanges significantly declining. The market is facing a real-time supply squeeze, rather than just a price increase driven by safe-haven sentiment.

Silver is not only a precious metal investment but also a key raw material for solar panels, electric vehicles, electronic products, and medical equipment. As industrial demand rises to account for 50% to 60% of total demand, bottlenecks on the supply side are forcing prices to rise vertically, exacerbating anxiety from financial institutions to real manufacturers.

Expanding Supply Gap and Capacity Constraints

The supply-demand gap in the silver market is widening. Data from 2025 shows that global silver demand will reach 1.24 billion ounces, while supply will only be 1.01 billion ounces, indicating a supply gap of 100 million to 250 million ounces. This situation of supply not meeting demand is described as a "structural deficit," with no signs of quick repair.

The core reason for this situation lies in the rigidity of supply at the mining end. Silver mining is mostly a byproduct of copper and zinc mining, and new mines typically take over 10 years to develop, with declining ore quality. Meanwhile, the incremental recycling is insufficient to fill this gap, leaving the supply side struggling to meet soaring demand.

Even more severe signals come from the plummeting inventory data. Since 2020, COMEX (New York Mercantile Exchange) silver inventories have decreased by 70%, and London vault inventories have dropped by 40%. At the current rate of demand, available silver inventories in some regions can only sustain for 30 to 45 days.

Disconnection Between Paper Silver and Physical Market

Market analysis also points out the extreme imbalance between "paper silver" and physical silver. It is estimated that the ratio of paper trading to physical silver is as high as 356:1, meaning that each ounce of physical silver corresponds to hundreds of paper claims This disconnection has exacerbated the fragility of the market. If even a small portion of buyers demands physical delivery, the existing system may face the risk of collapse. Market participants have already recognized this risk, which is also an important reason for the recent vertical rise in prices. Banks and institutions are responding to supply constraints, physical shortages, and the potential risks of the paper market.

Musk's concerns primarily stem from silver's core position in modern industry. Unlike gold, silver is not just a safe-haven asset but also an industrial metal. In addition to its applications in the electric vehicle sector, silver plays an irreplaceable role in the photovoltaic industry, electronic components, and medical devices. Currently, industrial use accounts for half of the total demand for silver.

Due to the lack of effective substitutes in many application scenarios, industrial buyers are less sensitive to prices but extremely vulnerable in the face of supply shortages. As Musk stated, the severe price fluctuations indeed pose a significant challenge for industries that rely on these critical raw materials