Silver Market Deficit to Continue Throughout 2026, Says Fitch’s BMI

The global silver market is facing a prolonged period of supply tightness, with analysts at Fitch Solutions’ BMI unit forecasting that the silver market deficit will persist through 2026. This ongoing imbalance—where demand outpaces available supply—is poised to shape price dynamics, industrial use, and investment behavior in the precious metals space throughout the year.

Understanding the Silver Deficit

A market deficit occurs when total consumption of a commodity exceeds the amount that is produced in a given period. In the case of silver, this imbalance isn’t a short-term phenomenon. Instead, it is part of a multi-year structural deficiency in the supply chain that began around 2021 and has been sustained by robust demand across various sectors.

According to Silver Institute data, the global silver market experienced a deficit for the fifth consecutive year in 2025, with demand exceeding supply by tens of millions of ounces. Much of this has been met by drawing down above-ground inventories, but with stocks thinning rapidly, the market’s structural imbalance is expected to continue.

Why the Deficit Persists

Several key factors contribute to the projected silver market deficit:

1. Strong Industrial Demand

Silver has unique physical properties—such as its unmatched electrical conductivity—that make it indispensable in industrial applications. It is extensively used in electronics, medical devices, solar panels, and electric vehicles. In particular, the rapid deployment of solar photovoltaic systems has significantly boosted silver consumption, even as manufacturers try to reduce silver intensity in panels.

Electric vehicles (EVs) also contribute to rising industrial demand. EVs use more silver per unit than traditional combustion vehicles due to the complex circuitry and power systems involved. This structural shift in automotive technology supports continued consumption growth.

2. Investment Demand and ETF Inflows

Beyond industrial use, investment demand—especially through silver exchange-traded funds (ETFs)—has surged. Investors often seek silver as a safe-haven asset during periods of economic uncertainty, interest rate volatility, or geopolitical risk. Gold’s price performance and shifting monetary policy expectations have also made silver appear relatively undervalued, encouraging portfolio allocations to the metal.

Fitch’s BMI report notes that these investment flows are a major driver of persistent demand, keeping pressure on available supplies and reinforcing market deficits through 2026.

3. Stagnant Supply Growth

Silver supply has struggled to keep pace with growing demand. Global mine production has remained relatively flat, with only incremental increases year-over-year. Much of the world’s silver also comes as a byproduct of other metal mining operations—including gold, copper, lead, and zinc—meaning that even significant price increases don’t necessarily translate into proportionate boosts in primary silver production.

Recycling has increased modestly, reaching multi-year highs, but it still contributes only a small fraction of overall supply and cannot compensate for the shortfall created by demand outstripping production.

The Role of Policy and Trade Restrictions

Policy decisions in major producing countries have also affected supply dynamics. For example, export restrictions in China—one of the world’s largest silver producers—have reduced the flow of physical metal into international markets, tightening inventories in trading hubs like London and Zurich. Such measures can reduce global liquidity and amplify deficits as available metal is hoarded domestically or diverted to local industrial uses.

Similarly, mining slowdowns or operational reductions at major producers—such as those at Mexico’s Fresnillo operations—limit the potential for near-term supply growth.

Implications for Prices

A sustained market deficit historically exerts upward pressure on prices. Already in 2025, silver experienced dramatic price gains, at one point pushing toward record levels as industrial and investment demand intensified. These tight supply conditions, coupled with continued deficits, suggest that price volatility could remain elevated in 2026.

Financial institutions like HSBC have responded to ongoing market tightness by raising silver price forecasts, with analysts noting that persistent physical shortages and backwardation in futures markets indicate sustained scarcity.

However, high prices can have mixed effects: while they support stronger revenue for miners, they may also stimulate demand destruction—where users reduce consumption or switch to alternatives—and incentivize future mine development. Yet given the long lead times for new mine projects and the byproduct nature of most silver production, supply is unlikely to catch up quickly.

Broader Market and Economic Context

Silver’s unique position at the intersection of industrial commodity and store-of-value asset gives it a distinct market profile. Unlike gold, which is primarily driven by investment demand, silver’s price is influenced by a more complex mix of industrial consumption, investor sentiment, and macroeconomic forces.

In a world increasingly focused on electrification, decarbonization, and technological transformation, silver’s industrial relevance is only expected to grow. Yet the continuing supply deficit underscores a structural challenge for producers, investors, and end users alike.

Looking Ahead

As 2026 unfolds, the silver market is likely to remain in deficit unless significant changes occur on either the supply or demand side. Further industrial expansion—particularly in renewable energy and advanced electronics—combined with strong investment inflows, will sustain demand. Meanwhile, supply constraints and limited new mine capacity will continue to restrain available silver volumes.

For market participants, policymakers, and industry observers, understanding the dynamics of this persistent deficit is crucial. Whether the market finds equilibrium through demand moderation, supply innovation, or inventory adjustments, the silver market’s trajectory in 2026 is set to be one of the most closely watched stories in commodities.