Silver Market Expected to Face Supply Shortage for Sixth Consecutive Year in 2026

The silver market is expected to experience a supply shortage for the sixth consecutive year in 2026. Although demand from the manufacturing, jewelry, and investment-grade silver bars and coins sectors is projected to decline by 5% to 1.08 billion ounces, it will still exceed the total supply from mines and recycling by 35 million ounces. High prices are prompting jewelers and manufacturers to seek alternatives or reduce their silver usage, particularly in the photovoltaic industry, where silver demand is expected to drop significantly by 21% this year. Newman, Managing Director of Metals Focus, believes that the peak demand for silver in photovoltaics has passed and will continue to weaken in the future, but it will still be an important component of the silver market in the coming years. BMO analysts point out that the silver market is at a critical turning point; over the past five years, photovoltaics contributed 55% of the incremental silver demand. However, as installation growth slows and silver savings are implemented, this sector is expected to give back about half of its incremental demand by 2030, shifting from the largest growth engine to a noticeable drag. BMO suggests that traditional measures of shortage can be misleading and prefers to focus on the balance between supply and the actual consumption by manufacturers and jewelers, anticipating an increasingly widening surplus that needs to be absorbed by investors. Meanwhile, Newman expects that industrial silver consumption, excluding solar energy, will grow by 4.5% this year, and with institutional holdings being relatively low, there is still room for investors to re-establish or increase their positions if sentiment improves.