Silver Institute: 67 Million Ounce Deficit Expected, Supporting Continued Upside for Silver

Volatility in the silver market has gradually eased, with prices stabilizing in the elevated range above $80 per ounce. Despite remaining below last month’s record highs, the long-term uptrend continues to be supported by strong fundamentals, according to the latest report from the Silver Institute.

The institute’s research note highlighted that the main support for the market comes from the ongoing supply-demand imbalance, which is expected to continue through 2026, marking the sixth consecutive annual deficit in the silver market.

Analysts noted that the factors supporting silver throughout most of 2025 remain in place, including tight physical supply in London, geopolitical volatility, uncertainty over U.S. policies, and concerns about the Federal Reserve’s independence.

According to the report, silver prices have risen approximately 11% since the start of 2026 through February 9. Coin and bar demand has strengthened in recent months, while global holdings in silver-backed exchange-traded products (ETPs) are estimated at around 1.31 billion ounces.

Investment Drives Prices… Industrial Demand Declines

Investment demand is expected to be the primary driver behind higher prices this year, as slowing economic activity weighs on industrial consumption. Conversely, higher prices are likely to pressure jewelry demand.

Physical silver investment is projected to rise by 20% to 227 million ounces, the highest level in three years. After three consecutive years of decline, Western physical investment is expected to rebound in 2026, supported by silver’s strong price performance and ongoing macroeconomic uncertainty. Investment demand in India is also expected to build on last year’s gains, reflecting positive investor sentiment.

Meanwhile, industrial demand is expected to decline by 2%, falling to around 650 million ounces, the lowest level in four years. The largest impact will be in the solar sector, as companies reduce silver usage or adopt substitutes for photovoltaic panels.

Electrification and AI Partially Offset Industrial Decline

Despite declining consumption in the solar sector, the global shift toward electrification supports broader industrial silver demand. The report noted that several industrial applications continue to benefit from favorable structural growth trends, particularly data center expansion, AI-related technologies, and the automotive sector, partially offsetting the decline in solar-related demand.

On the jewelry side, demand is expected to drop by more than 9% in 2026 to 178 million ounces, its lowest level since 2020.

The report explained that record-high prices, as seen in 2025, are expected to curb consumption across most key markets, led by India. China remains the main exception, with demand anticipated to rise slightly, supported by product innovation and the growing popularity of gold-plated silver jewelry.

Supply Rises… But Deficit Persists

Global silver supply is expected to increase by 1.5% in 2026, reaching 1.05 billion ounces, a decade high.

Despite the increase in supply and weakness in certain demand segments, the market is expected to remain in deficit for the sixth consecutive year, with a projected shortfall of around 67 million ounces.

The Silver Institute’s annual comprehensive silver survey, conducted by Metals Focus, is expected to be released in April, providing a more detailed view of market trends for the upcoming period.