The global silver market is on course for a sixth consecutive annual deficit in 2026, according to the Silver Institute's World Silver Survey, extending a run of shortfalls that has steadily drawn down above-ground inventories. The persistent gap between supply and demand has become the defining feature of the market, exposing it to price squeezes when investment demand spikes.

Industrial use, long the backbone of silver consumption, is softening modestly. Industrial fabrication is forecast to decline about 3 percent in 2026 to roughly 639.6 million ounces, a second consecutive annual drop and a multi-year low. The pullback stems largely from solar manufacturers reducing the amount of silver used per panel through thrifting and substitution, even as total solar installations continue to rise.

Other end uses are helping to offset that decline. The expansion of data centers, artificial intelligence-related technologies, and the automotive sector is expected to support silver consumption across a range of industrial applications, cushioning the drop in demand tied to photovoltaics.

The most striking figure is the cumulative drawdown. Since 2021, silver stocks have been reduced by about 762 million troy ounces to cover successive deficits, a depletion that underscores how thin the market's buffer has become. Investment demand is projected to remain strong through 2026, adding further pressure to available supply. The survey frames the year ahead as one of continued imbalance, where a shrinking inventory cushion leaves prices vulnerable to sharp moves in either direction when physical or investment demand shifts.

Source: The Silver Institute -- https://silverinstitute.org/silver-supply-demand/