Silver entered the second half of 2026 supported by a structural supply shortage, with the market recording a sixth consecutive annual deficit even as prices consolidated below their January record. The metal traded in the high $50s per ounce in late July, well off the $121 peak set earlier in the year but underpinned by fundamentals that analysts view as tight.

The deficit is the defining data point. The 2026 shortfall widened to 46.3 million ounces from 40.3 million a year earlier, according to industry survey data. Mine production is projected near 844 million ounces, essentially flat, constrained by the fact that roughly 74 percent of silver is produced as a byproduct of copper, lead, and zinc mining. Those operations respond to base-metal economics, limiting how much silver output can rise even when silver prices climb.

Demand kept pressure on the balance. Industrial applications account for about 58 percent of annual silver consumption, spanning solar photovoltaic manufacturing, electric vehicle components, semiconductor fabrication, and infrastructure tied to AI data centers. That industrial base provides a durable floor beneath demand regardless of investor sentiment.

Investment demand added momentum. Global bar and coin demand was forecast to run nearly 18 percent higher in 2026, helped by a rebound in North American retail buying that included a projected 57 percent increase from US investors.

With supply constrained and both industrial and investment demand rising, forecasters kept elevated price targets in place, though the metal's history of sharp swings left the near-term path dependent on interest-rate direction and the pace of industrial buying.

Source: FX Leaders -- https://www.fxleaders.com/news/2026/07/21/silver-price-forecast-july-21-2026-ai-demand-supply-deficit/