Silver Tops US$100, Market Heads for Sixth Straight Annual Deficit in 2026

Market supply and demand

On the supply side, total global silver output is forecast to increase by 1.5 percent to 1.05 billion ounces, the highest level in a decade.

Mine production is expected to edge up 1 percent to 820 Moz., supported by stronger output from existing operations and newly commissioned projects.

Mexico is forecast to deliver much of the growth from primary silver mines. In China, higher output is expected from China Gold International Resources' (TSX:CGG,OTCPL:JINFF)s Jiama polymetallic mine as expansion continues.

Canada is projected to see gains from projects such as Hecla Mining's (NYSE:HL) Keno Hill and New Gold's (TSX:NGD,NYSEAMERICAN:NGD) New Afton, which is in the process of being acquired by Coeur Mining (NYSE:CDE). Morocco’s Zgounder mine is also ramping up production, while Peru is expected to record declines at certain operations.

By-product silver from primary gold mines is forecast to increase. Contributions are expected from Barrick Mining's (TSX:ABX,NYSE:B) Pueblo Viejo in the Dominican Republic, Gold Fields' (NYSE:GFI) Salares Norte in Chile, and the Nezhda project in Russia, owned by SolidCore (formerly Polymetal International).

Output from primary silver mines is expected to remain largely flat, accounting for 28 percent of total mine supply.

Recycling is projected to rise 7 percent, exceeding 200 Moz. for the first time since 2012, as elevated prices encourage scrap flows, particularly from silverware.

Although prices have since cooled, the Institute noted that silver has established technical support and remains underpinned by tight physical supply and ongoing macroeconomic uncertainty.

Several of the forces that drove silver in 2025 remain in place. Constrained physical availability in London, geopolitical tensions, US policy uncertainty, and concerns about the Federal Reserve’s independence continue to drive prices upwards.

On the demand side, total global silver consumption is forecast to remain broadly flat in 2026. Gains in physical investment are expected to offset weakness in jewelry, silverware, and some industrial segments.

Meanwhile, industrial fabrication, the largest component of silver demand, is projected to decline by 2 percent to around 650 Moz., marking a four-year low.

As in 2025, the drag comes primarily from the photovoltaic (PV) sector. Although solar installations worldwide are expected to continue expanding, manufacturers are reducing silver use per panel through thrifting and substitution, resulting in lower silver demand from PV applications.

Other industrial uses offer partial relief. Growth in data centers, artificial intelligence-related technologies, and automotive electronics is expected to sustain silver consumption across several end uses, mitigating some of the losses in solar.

Consumer demand, however, remains under pressure from record-high prices. Jewelry demand is forecast to fall more than 9 percent to 178 Moz., marking its lowest level since 2020.

Silver investing

In contrast, physical investment is set to strengthen considerably.

The Institute projects a 20 percent rise, three-year high in physical investment to 227 Moz. After three consecutive annual declines, Western retail demand is expected to rebound as investors respond to silver’s price momentum and persistent macroeconomic risks.

Exchange-traded product (ETP) holdings currently stand at an estimated 1.31 billion ounces, and coin and bar demand has firmed in recent months. As of February 9, silver prices were up 11 percent year to date.

Even with higher supply and recycling, the market deficit is set to persist. The Institute noted that the global silver market will continue to rely on the drawdown of above-ground bullion inventories to bridge the gap.

While volatility is likely to continue, the Institute forecasts that strength in gold and sustained physical tightness may help cushion risks for silver as it navigates another year defined by deficit and demand.