Silver’s Structural Crunch: Copper Substitution Meets a Hawkish Dot Plot

The industrial narrative that once underpinned silver’s bull case is fracturing. Solar manufacturers, long the biggest driver of physical demand, are aggressively swapping the white metal for copper – a shift that is redrawing the supply-demand math just as the Federal Reserve keeps monetary conditions tight. Silver ended last week at $75.83, down 0.5%, with a tangle of headwinds and support levels vying for control.

The photovoltaic industry accounted for roughly three percent of module costs back in 2023; by now that share has ballooned to between 17 and 29 percent, forcing a wave of substitution. Longi Green Energy is ramping mass production of back-contact cells using copper instead of silver from the second quarter onward. Jinko Solar is scaling copper-based panel output, and Shanghai Aiko Solar has already launched silver-free cells. The impact is stark: silver consumption in the PV sector fell six percent in 2025 to 186.6 million ounces, and the industry expects another 19 percent slide to about 151 million ounces next year.

UBS has responded by slashing its 2026 supply-deficit estimate by 80 percent, from 300 million ounces down to a range of 60-70 million. The bank also trimmed its price targets: end-Q2 now seen at $85 instead of $100, September at $85 (down from $95), the year-end figure at $80, and March 2027 at just $75. Other houses disagree – Citigroup still sees $110 in the second half, Bank of America pencils in an $85.93 average, JPMorgan sits at $81 – but the downward revision from a major name adds a fresh layer of caution.

Should investors sell immediately? Or is it worth buying Silber Preis?

Monetary pressures are compounding the demand-side slowdown. The April CPI landed at 3.8 percent, the highest since May 2023, with energy prices surging 17.9 percent. The CME FedWatch Tool now prices in zero rate cuts for 2026. All eyes turn to the FOMC meeting on June 16-17, where the first dot plot under new Chair Kevin Warsh could deliver a hawkish surprise. Friday’s jobs report – expectations call for 120,000 to 150,000 new positions and an unemployment rate around 4.2 percent – will set the table. A hard line from the Fed keeps opportunity costs elevated for a non-yielding asset like silver.

Technically, the metal is perched just below a key moving average, only 0.35 percent beneath the 50-day line. Near-term resistance sits at $76.00; a clean break above $78.00 would open the door to a test of $80.00 and potentially restore upward momentum. On the downside, $73.47 is the crucial support. A close below that level turns attention to the $72.00 area, and failure there could accelerate losses toward $70.00.

Yet the market is not balanced. The Silver Institute forecasts a sixth consecutive annual deficit in 2026, roughly 46 million ounces, and cumulative shortfalls since 2021 have reached nearly 762 million ounces. Because roughly 70 percent of silver is mined as a byproduct of copper, lead and zinc, supply cannot ramp quickly in response to higher prices. That structural scarcity provides a floor, but with the solar engine sputtering and the Fed refusing to ease, the fuel for a breakout remains in short supply.

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