On December 23, the world's largest silver ETF (iShares Silver Trust) saw a single-day surge in holdings of 533.01 tons, marking the largest single-day increase since January 2023, bringing the current holdings to 16,599.25 tons. This rare substantial capital increase is no coincidence, but rather a strong recognition of the market's resonance with the fundamentals and financial attributes of silver, laying a strong foundation for the future performance of silver.
From a capital perspective, ETFs serve as the core tool for institutions to allocate precious metals, and their changes in holdings often reflect professional capital's medium to long-term views on the varieties. The increase of over 530 tons in a single day far exceeds the normal fluctuation level, indicating that institutional capital is positioning itself in silver with a 'grab and hold' approach. The underlying core logic first points to expectations for a shift in the Federal Reserve's monetary policy. As U.S. core inflation continues to approach the 2% target and the unemployment rate rises to its highest level since September 2021, CME's 'FedWatch' shows that the probability of interest rate cuts in March 2026 has exceeded 44%, with the approaching easing cycle significantly lowering real interest rates. Silver, being a commodity with both financial and commodity attributes, has a much greater valuation recovery elasticity in a low-interest-rate environment compared to gold, naturally becoming the preferred target for capital.
More critically, the industrial demand for silver is entering an "explosive phase," becoming the core confidence for long-term capital positioning. The photovoltaic industry is the largest driving force behind silver demand, with global silver usage in photovoltaics expected to double by 2025 compared to 2022, accounting for 55% of total silver demand. Alongside the continuous growth in silver consumption in the fields of new energy vehicles, 5G base stations, and AI computing servers, the global share of industrial silver usage has surpassed 60%. Meanwhile, constraints on the supply side continue to tighten, with a supply-demand gap in silver for five consecutive years. The production of silver in major producing countries such as Mexico and Peru has declined, the growth of recycled silver is weak, and the silver inventories at the London Bullion Market Association (LBMA) and the Shanghai Futures Exchange have fallen to multi-year lows. The rising spot premium further confirms the tight balance of supply and demand in silver.
The significant increase in ETF holdings is also forming a positive cycle with the market structure of silver. Previously, silver prices were in a phase of consolidation, and institutions completed substantial positioning through pullbacks. The surge in holdings will further boost market sentiment, attract speculative funds, and push silver prices closer to reasonable valuations corresponding to the supply-demand gap. Historically, large increases in silver ETF holdings are often accompanied by a trend-based rise in prices. After the increase in January 2023, silver saw a nearly 20% rise. This current scale of increase undoubtedly releases a clear bullish signal.
Of course, in the short term, silver prices may experience a pullback due to fluctuations in market sentiment, a rebound in the US dollar index, and other factors. However, from a mid to long-term perspective, the initiation of the Federal Reserve's easing cycle, the rigid growth of industrial demand, and the continuous expansion of the supply-demand gap will jointly support a bull market for silver. The recent substantial increase in ETF holdings is merely a reflection of funds positioning themselves ahead of the revaluation of silver's value. If industrial demand data continues to exceed expectations, the upward potential for silver will further open up. For investors, this change in holdings is both a barometer of market sentiment and an important reference for seizing mid to long-term investment opportunities in silver.
