Is silver poised to become the new gold over the next decade?
Silver's Structural Deficit Meets Record Volatility
Silver rose 130% in 2025, hit an all-time high of $121.62 per ounce in January 2026, then crashed toward $70 after a CME margin hike before recovering to roughly $72 in late March. The metal is up 161% year-on-year. It has also corrected 42% from its peak in under three months.
The case for silver rests on industrial demand and persistent supply deficits. The risks are equally concrete: thrifting, demand destruction at high prices, and the kind of volatility that can erase months of gains in days.
The Industrial Demand Story
Silver's demand base has shifted decisively. In 2014, solar photovoltaics consumed 11% of industrial silver demand. By 2024, that share reached 29%, per the Silver Institute. PV installations have grown tenfold in a decade, with China accounting for half.
EVs add a second driver. Battery electric vehicles use 67–79% more silver per unit than combustion engine cars, per Oxford Economics. Automotive silver demand is forecast to grow at 3.4% annually through 2031, with EVs overtaking ICE vehicles as the primary silver consumer by 2027, according to the Silver Institute.
Data centres and AI infrastructure form a third pillar, with silver embedded in connectors, semiconductors and cooling systems. The Silver Institute forecasts these three sectors will drive industrial demand through 2030.
The Deficit
The silver market has been in structural deficit since 2021, with demand outstripping supply by 100 to 250 million ounces annually, per J.P. Morgan — significant in a market where mine supply runs around 850 million ounces. The Silver Institute projects a sixth consecutive deficit of 67 million ounces in 2026, per Reuters.
Total supply is forecast at a decade high of 1.05 billion ounces in 2026, with recycling surpassing 200 million ounces for the first time since 2012, per Reuters. It is not enough. The market continues drawing down above-ground inventories.
The Complication
Industrial silver fabrication is forecast to decline 2% in 2026 to a four-year low of 650 million ounces, per the Silver Institute. The driver: solar manufacturers are thrifting silver content per cell and substituting away from silver in some PV applications. Next-generation architectures like TOPCon are more silver-intensive, but the industry is actively engineering around that.
Jewellery demand is projected to fall 9% to its lowest since 2020 as record prices suppress consumption, particularly in India. Silverware demand is expected to drop 17%.
Physical investment is the countervailing force — forecast to surge 20% to 227 million ounces, a three-year high. But investment demand is sentiment-driven and can reverse quickly, as the January-to-March correction demonstrated.
What Investors Should Weigh
Silver's demand is roughly 55% industrial, with no central bank bid underpinning the market. This makes it a leveraged play on economic growth and precious metals sentiment — with amplified upside and downside.
The forecast range reflects that. J.P. Morgan projects silver averaging $81 per ounce in 2026 — more than double the 2025 average but well below the January peak. Bank of America targets $135–$309 based on supply constraints. At the bearish end, J.P. Morgan's Kolanovic has warned silver could crash to $50 if speculative positioning unwinds before fundamentals catch up.
The March 2026 delivery cycle has stressed the pricing system, with delivery demand exceeding 60% of total registered inventory, per Finance Magnates. Tight physical supply in London and U.S. tariff concerns have amplified price momentum. But the January correction showed how quickly a CME margin adjustment can reverse it.
The structural deficit and energy-transition demand are real. So is the volatility. Silver rewards those who size positions for both outcomes.