The underlying factors behind the rapid rise in silver prices have been in place for several years. However, it wasn't until 2025 that a turning point in investor buying occurred. This renewed interest faded amid uncertainty over US tariffs and the inclusion of silver on the US Critical Minerals List. These factors triggered significant inventory buildup on COMEX and led to tighter market conditions, which resulted in regional shortages and pushed the price up 147% year-over-year.
When the US tariff situation becomes clearer, these inventories could put pressure on the market, but industrial demand, which has expanded in recent years and now accounts for 60% of silver consumption, prevents the price from plummeting, barring unpredictable technological changes or a global recession. This year, analysts expect silver prices to stay elevated not only due to industrial consumption, but also thanks to the same investment factors that drive gold's rally, such as macroeconomic uncertainty, geopolitical risks, and portfolio diversification.
While silver is far from its inflation-adjusted highs (around $200 per ounce), a parabolic price rise is also considered unlikely. High prices are expected to put downward pressure on demand in industrial silver applications (such as solar energy and electronics), keeping growth capped during periods of weakening investor inflows.
Slowing demand in photovoltaics...
One of the key drivers of industrial silver demand growth is the photovoltaic industry, where silver, with its outstanding electrical conductivity, is used as a paste for solar panel contacts. This industry, which is a part of the global energy transition, is rapidly growing and accounts for approximately 30% of global industrial silver consumption. CRU Group estimated the average silver content per solar panel module in 2024 at 15 - 20 grams (up to 0.64 ounces), depending on the cell type. The photovoltaics industry requires 197 - 257 million ounces of silver annually.
Solar energy's share of industrial silver demand:
The unprecedented rise in silver prices has increased pressure on solar cell manufacturers, forcing them to reduce costs by conserving or substituting silver, according to a February Heraeus precious metals report. The cost of silver paste has reached 30% of the total cell cost, while overproduction of solar cells is holding down prices and reducing manufacturers' margins.
Copper is being considered as a replacement, despite the technical difficulties of its use in this application. Major manufacturer Longi is switching to copper-based metallization this year. DK Electronic Materials has stated that 2026 will be the first year of mass production of high-copper pastes, and manufacturer TOPCon plans to use a solution with silver-coated copper paste.
On the other hand, the trend to conserve silver has been ongoing for a decade, so significantly reducing the silver content in cells is more difficult today than it was in 2011, Heraeus notes. Back then, silver prices reached $50 per ounce, and the photovoltaic demand declined for the first time. It took five years for this demand to recover.
The situation is complicated by the fact that the global solar panel capacity addition is beginning to slow down after setting new records in 2023 and 2024. This year, it is expected to remain at the 2025 level (approximately 655 GW), meaning that silver photovoltaic demand this year will decrease from 195 million ounces seen in 2025, as the white metal is being substituted for copper.
The standstill is primarily due to China achieving its 2030 target for solar panel capacity addition. According to estimates by BNEF and the China Photovoltaic Industry Association, solar panel installations in China could decline by 100 GW this year. Chinese solar panel demand accounts for almost 10% of global silver demand.
"In the medium term, the silver price will be even more exposed to investor sentiment and investment flows as a decline in what has been one of the main sources of industrial demand growth over the last 10 years will cut silver industrial demand," Heraeus report reads.
Meanwhile, according to The Silver Institute, the loss of subsidies and incentives for solar capacity addition in some countries will likely be offset by ambitious targets in others. For example, the EU aims to commission at least 700 GW of solar power by 2030, which will drive growth in silver consumption.
...And the jewelry industry
While silver has increasingly emerged in recent years as a critical component of the energy transition and digital technologies, the metal continues to play a significant role in traditional applications such as jewelry. This sector currently accounts for up to 18% of global silver demand. After growing by 4% in 2024 to 208.7 million ounces, demand in this sector fell to 199 million ounces last year amid a sharp rise in prices.
A worrying sign in this regard was the decision by one of the largest jewelry brands, Pandora, to announce in early 2026 that it would switch to platinum-plated jewelry due to high silver prices. The company plans to convert at least 50% of its silver jewelry range to platinum-plated by 2027, and eventually reduce the share of silver jewelry to 25%. The new versions of Pandora's best-selling charm bracelets will use a new platinum-plated alloy instead of sterling silver (also known as 925 silver - typically 92.5% silver + 7.5% copper).
Comparison of platinum and silver price trends in 2025-2026:
The Silver Institute forecasts that silver jewelry demand will decline in 2026 for the second consecutive year, falling more than 9% to 178 million ounces, the 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 trade body said in a February press-release.
Supply and demand dynamics
The Silver Institute estimated total silver supply in 2025 at 1.03 billion ounces, including 835 million ounces of mine production and approximately 200 million ounces of recycled silver (the highest level since 2012). Global silver demand in 2025 was estimated at 1.2 billion ounces.
The institute expects the silver market to be in deficit for the sixth consecutive year in 2026. This deficit is driven by structural growth in industrial consumption due to widespread electrification. Although the deficit is expected to narrow slightly amid slight supply growth and decelerating demand, from 118 million ounces to 67 million ounces, it still represents more than 11% of annual silver production globally.
Global demand will remain flat in 2026, as rising retail investment will likely offset declines in other key segments - primarily jewelry, silverware, and industrial consumption, according to The Silver Institute. Industrial silver usage will decline by 2% to a four-year low of around 650 million ounces, primarily from the photovoltaic sector.
"While global solar installations are expected to continue rising, ongoing thrifting and outright substitution away from silver will result in falling silver PV demand," The Silver Institute said.
Supply constraints and China's booming market
As for 2026, The Silver Institute expects the global silver supply to increase by 1.5% and reach a 10-year high of 1.05 billion ounces. Mine production is projected to grow by 1% to 820 million ounces, while recycling is expected to increase by 7%, exceeding 200 million ounces for the first time since 2012, as consumers actively take advantage of higher prices by selling silverware.
A sharp rise in silver prices cannot quickly translate into increased production. This is true for most metals, but especially for silver, as up to 75% of it is mined is a byproduct of copper, zinc, lead, and gold production. The average silver grade in ore at operating mines has been steadily declining. Over the past 10 years, silver grades at the 12 largest mines has fallen by 36%, while those in reserves have fallen by 40%. This means that to produce the same amount of silver, mining companies must process more than 1.5 times more ore than they did ten years ago.
In addition to these structural restrictions, China, the second-largest silver producer and exporter, introduced silver export licensing this year, akin to that for rare earth metals. Chinese export restrictions, particularly on silver as a byproduct of copper refining, could lead to a reduction in global supply, warns Sumitomo Corporation analyst Keisuke Okui.
In China itself, stockpiled inventories are still being depleted due to investment and industrial demand, despite a slight decline in the solar panel sector, Bloomberg reported.
Chinese manufacturers and traders are struggling to fulfill the backlog of orders, leading to rising short-term prices and strong backwardation in the market, meaning prices for immediate delivery are higher than futures prices. The front-month contract on the Shanghai Futures Exchange has reached a record high, while inventories have fallen to a decade-low.
Silver inventory trends on the Shanghai Futures Exchange over 10 years:
Healthy demand remains both from physical investors and from industrial buyers, including Chinese solar panel makers who are ramping up production to meet demand ahead of the end of export duty relief on April 1. Many firms took advantage of the January price drop to buy silver on the dip, Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Management Co., told Bloomberg.
LBMA forecasts
Analysts surveyed by the LBMA as part of its Annual Precious Metals Forecast Survey expect silver to continue to outperform other precious metals in 2026, maintaining favorable momentum thanks to industrial demand. The consensus forecast for an average silver price this year is $79.57 per ounce, 98% higher than the 2025 average actual price of $40.03 per ounce.
"Structural deficits, tight mine supply and accelerating demand from electrification, electronics and AI‑driven technologies are keeping bullish pressure intact," LBMA argues.
However, analysts warn that the market could be overheated after explosive growth in 2025.
"Price‑sensitive sectors are already rolling over, and any easing of tariffs or physical bottlenecks could unwind premiums just as substitution and recycling ramp up," LBMA notes.
The underlying theme of all forecasts is the inevitable and ever-present price volatility of silver. The relatively small and less liquid silver market typically exhibits both upward and downward bias. The most optimistic silver price forecast in the LBMA survey reaches $165 per ounce, while the most pessimistic is $42 per ounce. This price range between forecasts of $123 per ounce is 170% higher than the actual 2025 trading range of $45.43 per ounce. It is also 351% higher than the 2025 range between forecasts of just $19.5 per ounce.
"Silver’s smaller market size and lower entry cost make it more volatile, attracting investors seeking alternatives to expensive gold. Structural supply deficits – driven by robust photovoltaic and industrial demand – combined with rising jewelry and investment purchases, will amplify price swings," said ICBC Standard Bank analyst Julie Du.
She expects the market to face speculative surges driven by regional supply imbalances, during which silver could reach a yearly high of $150 per ounce, or experience a temporary correction to $62 per ounce on profit-taking.
Du’s most optimistic forecast for the average price is around $125 per ounce. She argues that a bullish trend in the silver market in 2026 will be supported by the same macroeconomic factors that are affecting the gold market, such as persistent geopolitical tensions, strong demand for safe-haven assets, and continued interest rate cuts by the US Federal Reserve.
The author of the most bearish forecast, Bart Melek of TD Securities, expects the price to average $44.25 per ounce, with a projected low and high of $42 per ounce and $86 per ounce, respectively. His caution is based on the forecast of slightly lower industrial demand in 2026 and significantly higher LBMA inventories.
"With US tariffs not being an issue, excess metal located in the U.S. should continue to flow back into the LBMA system, which should provide liquidity and eliminate much of the current price premia," Melek notes.
With the metal overbought, weak physical demand and slowing investor interest could well trigger the expected correction, which, however, will not develop into a deep and prolonged collapse, he believes.
LBBW analyst Frank Schallenberger expects the price to average $63.2 per ounce this year, as, according to him, the market is experiencing something of a bubble. With a gold/silver price ratio of 55 to 1, he believes silver is definitely too expensive relative to gold. Therefore, he expects a reduction in ETF purchases, which, combined with the forecast of falling jewelry demand and weak industrial demand due to low global economic growth, could lead to the bubble bursting.
Sergey Bondarenko for Rough&Polished
