Surplus After Volatility
The anticipated surplus follows a period of extreme price volatility. International silver surged from $30 an ounce on January 1, 2025, to an all-time high of $121 an ounce in January 2026. By June, prices had corrected by nearly 65% to $57 an ounce, and are currently trading between $60 and $61 an ounce.
The Indian market mirrored this trajectory, with silver climbing from ₹100,000 per kilogram in January 2025 to ₹420,000 by the end of January 2026. Domestic prices then dropped to ₹194,000 in June and are currently holding near ₹225,000 per kilogram. Overall, silver has declined 8% over the last month and is down nearly 14% for the year, though it remains 27% higher on a year-on-year basis.
The fundamental supply-demand balance is shifting rapidly. The global silver deficit, which started at 80 to 100 million ounces in 2021 and peaked at 237 million ounces in 2022, has narrowed sharply. The deficit fell to approximately 40 million ounces in 2025 and is expected to be 46 million ounces this year, with markets anticipating a surplus by 2027.
Decline In Demand
This transition stems from a significant demand pullback, particularly a nearly 30% decline in solar applications in China. Broader industrial fabrication has also declined over the past three quarters, largely triggered by the steep price increases. To mitigate costs, manufacturers are increasingly adopting thinner electrical contacts, silver paste, and silver plating on copper instead of using pure silver components.
Supply availability is also increasing. Mine output is expanding, and the London Metal Exchange (LME) currently holds a record 914 million ounces of silver inventory ready for purchase. While physical investment is estimated to grow by 18%, markets anticipate potential fund liquidation following strong exchange-traded fund buying in recent years.
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Consequently, major brokerages expect silver to consolidate rather than revisit triple-digit highs in 2027. UBS projects prices at $80 an ounce, while Commerzbank targets $95 an ounce. JPMorgan expects current levels to serve as the average for next year, and institutions including Citi, Deutsche Bank, and HSBC forecast a lower consolidation range between $65 and $75 an ounce.
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