Silver market faces sixth consecutive year of supply deficit

The silver market is projected to enter its sixth consecutive year of supply deficit. According to The Silver Institute, a deficit of approximately 67 million ounces is expected for 2026, driven by a projected 20 percent increase in physical investment demand.

Structural shortages are being exacerbated by several factors. COMEX registered stocks have declined by roughly 70 percent since 2020, and Chinese export restrictions in place since January 2026 have further tightened global availability. On the demand side, industrial use is rising due to the expansion of photovoltaics, electric vehicles, and data center infrastructure for artificial intelligence. Industrial demand could exceed 700 million fine ounces per year by 2030.

In the short term, silver prices are influenced by shifting interest rate expectations. As markets price in less aggressive monetary policy from the Federal Reserve, the attractiveness of non-yielding commodities like silver increases relative to interest-bearing assets. While recent price consolidations have occurred, silver has maintained a monthly gain of approximately 15 percent.