200 million ounces. That’s not a forecast; it’s a recurring gap in the silver market. It’s also the exact number that once broke the system. Back in the 1970s, two oil-rich brothers nearly cornered the silver market with a 200-million-ounce bet. Prices exploded 800%, regulators panicked, and the aftermath scarred the metal’s reputation for decades.

Now, more than 40 years later, we’re back at that number. But this time, no one's hoarding it: the deficit is just quietly happening. Every year. On repeat.

So the question isn't if silver will react.

The question is: what happens when it finally does?

A Trip to the 1970s

In the early 1970s, something huge happened. Triggered by Nixon's economic reforms (what we now call the "Nixon Shock"), brothers Nelson Bunker Hunt and William Herbert Hunt decided to buy silver as a hedge against what they saw as US dollar instability.

A quick detour: Nixon's policy in 1971 had three big goals:

• Reduce inflation
• Strengthen the US dollar
• Lower unemployment

(Feels eerily familiar to today's world, doesn’t it?)

But the big move was this: Nixon ended the dollar’s convertibility into gold. This basically broke the global monetary system that had existed since World War II, the Bretton Woods system. Currencies floated freely, and the dollar was no longer “as good as gold.”

Back to the Hunt Brothers.

Worried about currency debasement, they started buying silver like there was no tomorrow. By 1974, they had quietly collected 50 million ounces. Rules were changed to slow them down, but futures markets allowed them to go even bigger.

By 1979, with help from others (including members of the Saudi royal family), they controlled almost 200 million ounces: about half the world's annual production at the time!

And silver prices?

They exploded from $6 to $50 per ounce within a year. Eventually, regulators stepped in. Trading rules were changed, margins were raised, and prices collapsed back to $11. The Hunt brothers were hit with massive losses and filed for bankruptcy by 1985.

Why Does This Matter Today?

Fast forward to now.

Once again, we have a 200 million ounce imbalance - but this time, it's a structural market gap, not a speculative hoarding event.

Silver has been running a structural deficit for 5 years straight. Demand continues to outpace supply and 2025 looks no different.

As you can see under the ‘Net Physical Investment’ head in the ‘Demand’ section, the demand from investors for physical silver has been falling for the past few years.

In contrast, the industrial demand for silver has only risen, and the metal’s industrial uses are now stickier than ever. This has made silver prices highly sensitive to investment demand. Even a relatively small rush back into silver could have a big impact.

Indeed, we have seen something similar play out recently with gold. Just two years ago, gold prices were struggling due to a lack of investment demand. The gold demand-and-supply situation was also tight (although silver's D/S is much tighter at present).

But then the world's central banks swooped in and bought nearly 2,500 tonnes of gold over just 26 months. That set gold prices on fire. And the recent trade war has added more fuel to the fire!

Now, what’s especially interesting about silver is that its price sensitivity to an increase in investment demand could be much higher than that of gold (this is admittedly hard to quantify, though).

Where this investment demand could come from is unclear. But speculators, hedgers, or even institutions looking to stack up on non-fiat reserve assets could eye silver in the near future.

Is Silver Expensive Right Now?

Not really, when you look at it relative to gold.
The Gold:Silver ratio - basically how many ounces of silver you need to buy one ounce of gold - usually hovers around 60–65. But right now, it’s close to 100, as you can see below.

This means that silver is currently trading at a level that’s not expensive when compared to gold.

Moreover, the Gold:Silver ratio has hit extreme levels - historically, moves like these tend not to last.

In simple terms: if you believe gold will stay strong (or even rise further), silver could have an even bigger catch-up run. Gold’s valuation has a monetary anchor. When compared to money supply, it doesn't look frothy.

Silver isn’t “cheap” in absolute terms, but relative to gold and considering its tight demand- supply setup, it still looks interesting.

Using a normalised Gold:Silver ratio of 60:1, silver’s fair value sits between $53 and $75 - well above the current price of around $33.

So, Should You Buy Silver?

For investors who understand the dynamics discussed above, some exposure to silver through Silver ETFs or Silver FOFs could be a smart move. These options let you tap into silver’s potential without getting into complex commodity trading.

That said, silver remains a highly volatile asset and isn't suited for everyone especially not the faint-hearted. For most investors, holding silver as a small part of a broader Multi-Asset Allocation strategy via mutual funds may be the more balanced approach.

If you’d like to learn more about how silver can benefit your portfolio, or if you need help with any aspect of the investing process, simply click here to reach out to our experts.

Adapted from:

Why Silver?

200 million ounces. (Remember this number as you read.)

That's the deficit in the annual Silver demand and supply.

Annually, Silver demand is approx 1200Mn Ounce but the current supply is about a 1000Mn ounce. That a deficit of 200MnOu. 2025 would be the fifth year… pic.twitter.com/d379qdabQl

— Sahil Kapoor (@SahilKapoor) April 28, 2025