Silver's Stealth Deficit: By-Product Constraints and Inventory Depletion Deepen Structural Scarcity
Published on 07/14/2026 at 13:27 | Redaktion boerse-global.de
For all the daily noise around inflation, interest rates, and geopolitics, the silver market is quietly being reshaped by a far more stubborn force: the metal's own production profile. Roughly 70% of global supply emerges not from dedicated silver mines, but as a by-product of copper, lead, zinc, and gold mining. That structural quirk means output responds to the economics of base metals, not to silver's price signals — and it is locking the market into a deepening supply deficit.
Industry estimates now point to a sixth consecutive annual shortfall in 2026, with the gap expected to reach 46.3 million ounces. The cumulative deficit since 2021 has swelled to approximately 762 million ounces — a volume roughly equivalent to an entire year's worth of global mine production. With new supply constrained by by-product dependency, the market has been forced to drain existing stockpiles. At the COMEX, registered silver inventories have plunged more than 75% from their 2020 highs, leaving just 79.9 million ounces of freely available metal as of mid-2026. Physical scarcity on the spot market stands in stark contrast to the price dynamics on futures exchanges, where speculative positioning and a resurgent US dollar have kept a lid on gains.
Demand, however, is not standing still. The solar industry, historically the largest industrial consumer of silver, is set to pare its usage by 19% this year to 151 million ounces as manufacturers pivot toward copper metallization to rein in costs. That reduction is being offset by an entirely new source of consumption: the thermal management of high-performance chips in data centres. Silver-based pastes are used to cool artificial-intelligence processors that can reach operating temperatures of 350 degrees Celsius. Together with sustained demand from electric vehicles and 5G infrastructure, aggregate industrial offtake remains near record levels despite the solar retreat.
Should investors sell immediately? Or is it worth buying Silber Preis?
The tension between tight supply and resilient demand provides a fundamental floor, but near-term price action has been dominated by macro forces. The dollar has strengthened amid rising bets that the Federal Reserve will deliver another rate increase. Following a spike in oil prices — triggered by renewed tensions in the Strait of Hormuz, a US-imposed blockade, and a 20% transit fee — inflation fears have revived. CME FedWatch data now puts the probability of a September rate hike at 51%, versus 23% for a hold. Fed Governor Waller has warned that a rate move would be necessary if core inflation reaccelerates, while Chair Warsh is scheduled to testify before Congress on July 14-15 — an appearance that could set the tone for weeks to come. Higher-for-longer borrowing costs raise the opportunity cost of holding a non-yielding asset like silver, and the gold-to-silver ratio has widened to 69:1, reflecting silver's relative underperformance.
Despite the current headwinds, analysts see the structural deficit as a compelling reason to stay bullish. UBS has set a year-end 2026 price target of $80 per ounce, while HSBC forecasts $75 for 2026 and $68 for 2027. Both highlight the inability of mine supply to respond quickly as the core support. On the supply side, some relief is in sight but remains distant: Silver Mountain Resources is preparing to restart the Reliquias mine in Peru during the third quarter of 2026, with a processing plant already 95% complete and a capacity of 2,600 tonnes per day. An expansion of the Sierra Gorda operation is expected to add roughly 170 million ounces annually from 2031 onward — too far out to plug the near-term hole.
Meanwhile, the Shanghai Futures Exchange has tightened risk controls for the new AG2705 silver futures contract, imposing a 17% daily price limit and margin requirements between 18% and 19%. The move signals that exchange operators are bracing for continued volatility as the tug-of-war between physical scarcity and monetary policy plays out. All eyes this week are on the US inflation data for June, due Tuesday, which will provide the next clue on whether the Fed can afford to stay patient — or whether a rate move that would further pressure silver is already on the cards.
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