For decades, silver needed inflation or crisis to rally. That dependency may finally be ending. Silver's latest surge isn't being powered by CPI surprises or geopolitical fear. Instead, it's being pulled higher by structural demand from AI data centers, semiconductor manufacturing, and renewable energy — a shift that could permanently change how the metal trades.
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From Macro Trade To Industrial Input
In an exclusive interview with Benzinga, Ed Egilinsky of Direxion highlighted how silver's usage in semiconductors and data centers is becoming "transformative in nature."
These aren't speculative trends. They're capital-intensive, policy-supported investments with long time horizons.
Why Inflation Is No Longer Required
Unlike past cycles, silver, and the iShares Silver ETF (NYSE:SLV) as a proxy, have rallied even as market volatility stayed subdued. “This is evident over the last two years where the VIX has been mostly muted, yet gold and silver have rallied sharply,” said Egilinsky. That suggests demand is coming from physical consumption rather than financial hedging.
Solar energy alone remains a major silver sink, and AI infrastructure adds another layer of steady, non-discretionary demand. “The weakening of the U.S. Dollar in 2025 also provided some added fuel to the silver rally,” noted Egilinsky.
Supply Constraints Add Fuel
Downstream bottlenecks and export restrictions have limited silver's ability to respond quickly to demand spikes. When consumption rises, prices don't gradually adjust — they gap higher.
That dynamic makes the shiny metal more sensitive to structural demand shifts than markets may be pricing in.
A Re-Rating, Not A Trade
Silver is increasingly behaving less like gold's volatile cousin and more like a strategic industrial metal tied to the global electrification and compute buildout.
Investor takeaway: If AI and solar continue scaling, silver's cycle may be breaking — and long-term allocations may start replacing short-term trades.
Image: Shutterstock
