We hear a lot about surging gold prices in this uncertain economy, but silver has been breaking records, too. Helping fuel that rally is a physical shortage.

At the beginning of the year, something weird was happening in the silver market: Huge volumes of silver bars were being flown from the metal’s international trading hub in London to New York.

“People literally were putting metal on airplanes and shipping it across,” said Maria Smirnova, senior portfolio manager and chief investment officer at Sprott Asset Management.

Silver, she said, is heavy. Shipping it by air across an ocean normally just isn’t profitable. But fear over President Donald Trump’s tariffs was driving up silver prices on the U.S. market.

“And that’s starting to happen the other way now,” Smirnova said. “People are putting metal on planes to go back.”

That unusual flow of silver into the U.S. in early 2025 — plus a spike in demand for silver during the Diwali holiday in India — helps explain why the London market nearly ran out of physical silver last week, she said. (Gold faced a similar squeeze earlier this year.)

But underlying all of that is a longer-term shortage of the white metal. “There hasn’t been enough investment in silver mines in the last 10 years,” Smirnova explained.

Global demand for silver has been outstripping supply since 2020, according to the industry trade group the Silver Institute.

“Quite frankly, right now, where we speak, this fifth year will more than likely extend into a sixth year of a structural deficit in 2026,” said CEO Michael DiRienzo.

Most silver mining happens as a byproduct of gold, lead, or zinc mining, he said — meaning supply isn’t all that responsive to swings in demand.

“So there’s no fast resolution to this,” said DiRienzo. “It’s hard to discover silver. It’s even harder to build a mine and then get the necessary permits and the final green light to go ahead and start production.”

Silver production has fallen about 800 million ounces behind global demand, DiRienzo added. And unlike its flashier cousin gold, “on our demand tables, you’ll see that we’re 60% industrial uses for silver.”

Uses like “soldering, used as catalysts, smartphones, some parts of electric vehicles,” said Ian Lange, an economist at the Colorado School of Mines.

Silver goes into just about anything with an on-and-off switch, he said. So if demand keeps outstripping supply, everything from solar panels to AI data centers is going to get more expensive to build.