Silver volatility eases, but structural deficits keep bullish outlook intact - Silver Institute
NEW YORK (February 10) Volatility in silver is starting to ease, with prices consolidating in the elevated $80-an-ounce range. While the market is still well below last month’s all-time highs, the long-term uptrend remains well supported by robust fundamentals, according to the latest report from the Silver Institute.
In its latest research note, the Institute said that silver’s biggest fundamental support comes from the ongoing supply and demand imbalance, which is expected to continue through 2026, marking a sixth consecutive annual market deficit.
“The underlying drivers that supported silver throughout much of 2025 have remained firmly in place so far this year. These include tight physical supply in London, a volatile geopolitical backdrop, U.S. policy uncertainty, and concerns over the Federal Reserve’s independence,” the analysts said in their note. “The silver price has risen by 11 percent in 2026 as of February 9. Coin and bar demand has strengthened in recent months, while global ETP holdings stand at an estimated 1.31 billion ounces.”
Investment demand is expected to be the main driver behind higher prices this year, as slowing economic activity takes its toll on industrial consumption. At the same time, higher prices are expected to weigh on jewelry demand.
“Physical investment is forecast to rise by 20 percent to a three-year high of 227 Moz. After three consecutive years of decline, Western physical investment is expected to recover in 2026, as silver’s exceptional price performance and ongoing macroeconomic uncertainty rekindle investor interest. Investment demand in India is also likely to build on last year’s substantial gains amid positive investor sentiment,” the report said.
Meanwhile, industrial demand is expected to decline by 2%, falling to a four-year low of around 650 million ounces. The biggest impact will be felt in the solar sector, as companies continue to use less silver or find substitutes for their photovoltaic solar panels.
However, while the solar sector is seeing falling consumption, the overall electrification of the global economy is expected to support silver’s broader industrial demand.
“Several silver applications continue to benefit from favorable structural growth trends. In particular, the expansion of data centers, artificial intelligence-related technologies, and the automotive sector are expected to support silver consumption across a range of industrial end-uses, partially offsetting the decline in PV-related demand,” the report said.
Silver jewelry, another significant pillar of the market, is expected to decline by more than 9% in 2026 to 178 Moz, its lowest level since 2020.
“As in 2025, record-high prices are expected to curtail consumption across most key markets, led by India. China will be the main exception, with demand anticipated to edge higher, supported by product innovation and the growing popularity of gold-plated silver jewelry,” the report said.
Although the market is expected to see demand weakness in some segments, overall demand is still projected to outstrip supply.
The report said that total global silver supply is forecast to increase by 1.5 percent in 2026, reaching a decade high of 1.05 billion ounces.
Overall, the silver market is expected to remain in deficit in 2026 for the sixth consecutive year, at a noteworthy 67 Moz.
The Silver Institute’s annual silver survey, conducted by Metals Focus, will be released in April.
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