UBS has cut its estimate for the 2026 global silver market deficit to roughly 60 to 70 million ounces, a sharp reduction from its earlier projection of 300 million ounces, according to a note from strategists Wayne Gordon and Dominic Schnider covered by Kitco News. The smaller deficit reflects weaker investment demand, softer industrial consumption, and a modestly stronger mine supply outlook, with mine output now expected to reach approximately 850 million ounces.

Alongside the narrower deficit forecast, UBS lowered its silver price targets across every time horizon. The bank'''s end of second quarter 2026 target was cut to 5 per ounce from 00, its September target fell to 5 from 5, its year end target dropped to 0 from 5, and its March 2027 forecast was reduced to 5 from 5.

The bank pointed to weakening investment flows behind the revision. Total known silver ETF holdings have fallen by nearly 70 million ounces to around 794 million ounces, while net speculative futures positioning has pulled back to just above 100 million ounces. UBS cut its full year investment demand estimate to 300 million ounces from an earlier projection above 400 million ounces.

On the demand side, UBS estimates that weaker photovoltaic demand, combined with softer silverware and jewelry purchases tied to elevated prices, will cut overall silver consumption by about 50 million ounces this year.

The strategists said gold remains a stabilizing force for silver prices and expect the gold to silver ratio to widen toward 75 to 80 over time. They said they favor selling volatility rather than holding outright long positions, citing implied volatility that remains historically elevated even after retreating from its February peak.

Source: Kitco News - https://www.kitco.com/news/article/2026-05-14/silver-price-outlooks-chopped-supply-deficit-forecasted-narrow-dramatically