I'm a Portfolio Manager: Silver Has Lost Its Shine — and That's Why I'm Interested
Silver was riding high earlier this year, but interest has waned now that prices have pulled back. For the right investors, however, that's when the interesting opportunities emerge.
I can usually tell where we are in the precious-metals cycle by the questions investors ask me. When precious metals are quiet, few people want to discuss them.
When gold begins making headlines, interest builds. Then, after gold and silver have already rallied significantly, the questions inevitably shift to silver.
But when prices pull back, that interest disappears almost as quickly as it arrived. As a portfolio manager at Meristead Wealth, I have seen this pattern before, and it reflects one of the great challenges of commodity investing: Investors tend to become most enthusiastic when prices and expectations are already high.
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The better time to get interested is often after both have come back down.
So, let's talk silver.
Silver is more than a precious metal
Silver is sometimes dismissed as "poor man's gold." That description badly understates what the metal has become. Like gold, silver has served as money and a store of value for thousands of years.
But unlike gold, silver plays a significant role in industry. It can be found in electronics, automobiles, medical equipment, electrical infrastructure and countless other products that have little to do with jewelry or investment demand.
Silver is particularly important to several technologies expected to shape the next generation of the global economy, including solar panels, electric vehicles, semiconductors and artificial intelligence data centers.
The reason comes down to the metal's physical properties. Silver is the most electrically conductive metal on Earth. In plain English, that means electricity can pass through it with exceptionally little resistance or wasted energy. It is also an excellent thermal conductor, allowing it to move heat away from sensitive components before they overheat.
Those qualities are valuable in everything from solar cells and vehicle charging systems to computer chips, servers and high-performance electrical connections. Industrial silver demand totaled 657.4 million ounces in 2025.
Although that was down modestly from the prior year's record, demand continued to benefit from investment in artificial intelligence infrastructure, automobiles and the power grid.
Here's the problem
The problem is that silver supply has not kept pace. The global market is projected to record its sixth consecutive annual supply deficit in 2026, with demand exceeding supply by an estimated 46.3 million ounces.
Since the current run of deficits began in 2021, about 762 million ounces have been drawn from above-ground inventories to bridge the cumulative gap between supply and demand.
That does not mean the world is about to run out of silver. It does mean that newly mined and recycled supply has repeatedly been insufficient to satisfy annual consumption, forcing the market to rely on metal accumulated in earlier years.
Mine production, meanwhile, has been remarkably stagnant over the past decade. Many of the world's premier silver districts are mature, and declining ore grades mean miners must move and process more rock to produce the same amount of metal.
Recycling can help, but only to a point. Some silver is concentrated in products such as jewelry, silverware and larger industrial components, making it economical to recover.
In many modern applications, however, each device contains only a tiny amount. A smartphone, medical instrument or electronic sensor may depend on silver to function yet contain so little that the recovered metal would be worth less than the cost of collecting, dismantling and processing the product.
As a result, much of the silver dispersed across millions of finished goods is unlikely to return to the market under current economics.
Diverse drivers of demand
The result is a precious metal with tight supply and a diverse collection of demand drivers. Better yet for silver producers, the small quantity used in many finished products can make demand relatively insensitive to price.
If the silver inside an expensive server, automobile or piece of medical equipment accounts for only a tiny fraction of its total cost, the manufacturer is unlikely to stop producing that item simply because silver becomes more expensive.
Supply can be equally unresponsive. Most silver is not produced by mines built primarily to extract silver. Instead, it is recovered as a byproduct from mines whose economics are driven by lead, zinc, copper or gold.
A sharp increase in silver prices will not necessarily convince a copper miner to expand production if copper prices, ore quality or the rest of the project economics do not justify it. Unlike commodities for which higher prices can quickly encourage greater production, silver supply does not always respond directly to the silver price.
For patient investors, that is an interesting setup indeed. Deciding how best to invest in it is more complicated.
Not all silver investments are equal
There is, of course, physical silver. Many of our clients at Meristead choose to own some precious metals directly, typically with the intention of holding them indefinitely or treating them as a form of "when stuff hits the fan" insurance.
That is a perfectly reasonable purpose for physical ownership. But owning more sizable quantities introduces practical problems, including secure storage, insurance and the risk of theft. Exchange-traded funds offer a more convenient alternative, but they charge fees and require investors to understand the fund's structure and custody arrangements.
Neither coins nor physical silver-backed funds provide the operating leverage that can make precious-metals equities especially rewarding when metal prices rise.
The obvious equity alternative is to buy a silver miner. Unfortunately, truly silver-focused mining stocks are in surprisingly short supply. Most of them are tiny companies that may own a mine but aren't currently pulling any silver out of the ground (which is to say, they aren't making any money).
This scarcity can also cause the few higher-quality silver companies to trade at premium valuations relative to the much larger universe of gold miners.
Even the "pure" silver miners are rarely as pure as the label suggests. Silver deposits frequently contain gold, lead, zinc or copper, and those other metals can represent a substantial share of a company's reserves, production or revenue. Investors who insist on seeing the word silver in the company name may therefore be restricting themselves to a small and sometimes expensive opportunity set without actually obtaining pure silver exposure.
Where silver hides in plain sight
At Meristead Wealth, we have found that investors seeking exposure to both gold and silver can often get the best of both worlds by looking beyond the narrow silver-miner category. A number of businesses thought of primarily as gold companies own meaningful silver-producing assets.
These companies can provide participation in higher silver prices without forcing investors to accept the limited choices or scarcity premiums that may accompany the most obvious silver stocks.
Newmont (NEM), for example, is known as one of the world's largest gold miners. Yet its Peñasquito operation in Mexico is also one of the world's largest silver mines. Peñasquito sold about 28 million ounces of silver in 2025, in addition to producing gold, lead and zinc. That is meaningful silver exposure hiding inside a company most investors place firmly in the gold bucket.
A different business model to consider
Another option is to move one step away from operating the mines altogether. In a previous Kiplinger article, I discussed precious-metals royalty and streaming companies, which provide miners with capital in exchange for a percentage of future production or revenue.
These businesses are typically highly profitable and capital efficient, and they avoid many of the day-to-day labor, equipment and cost risks faced by mine operators. They are not risk-free — their fortunes still depend on the underlying mines and operators — but I generally prefer the business model to traditional mining.
Here, too, investors can find both gold and silver exposure. Wheaton Precious Metals (WPM) is the clearest example. Longtime precious-metals investors may remember the company by its original name, Silver Wheaton — a nod to its roots as a silver-focused streaming business.
It has since broadened its portfolio, but silver still generated 36% of Wheaton's revenue in 2025, alongside 62% from gold. Its streaming agreements also provide exposure to hundreds of millions of ounces of attributable silver reserves and resources.
Royalty companies that appear more gold-oriented can offer silver exposure as well, although the degree varies by portfolio. Investors should examine the metals underlying each company's streams and royalties rather than relying on its name or headline gold-equivalent production.
That work can uncover silver assets within diversified businesses that offer stronger balance sheets, broader portfolios and, in some cases, more attractive economics than a narrowly focused mine operator.
Silver is still volatile
Investors who piled into silver when enthusiasm was at its peak earlier this year are now hurting. That is often the result of buying a volatile asset near record prices, when expectations are through the roof and it feels as though the rally can only continue. Just a handful of months ago, silver had both elevated prices and elevated expectations. Today, it has neither.
Make no mistake: Silver remains volatile, and I would hardly advise anyone to go "all in." Mining and royalty stocks also introduce company-specific risks that do not exist when owning the metal directly. But for investors possessing the right combination of patience and risk tolerance, a thoughtful allocation to silver-related equities after the recent pullback looks considerably more attractive than it did amid the excitement that preceded it.
In commodity investing, some of the best opportunities emerge only after the shine has worn off.
This commentary is for informational purposes only and is not investment advice or a recommendation. Any securities identified do not represent all securities purchased, sold, or recommended, and readers should not assume that investments in these securities were or will be profitable. Views and examples are subject to change and are not investment recommendations.
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