Silver’s Twin Demand Shock: Solar Exodus and Thrifting Redraw the Deficit Map

Silver finished last week at $75.83 an ounce, little changed, yet the quiet price belies a storm brewing underneath. The metal is caught between two powerful forces that are reshaping its demand profile — one from the solar industry’s abrupt shift to copper, the other from a broader industrial thrifting trend that is forcing manufacturers to use less silver per unit. Together, they are eviscerating earlier deficit forecasts and leaving the bull case on shaky ground.

Copper substitution gains momentum

The solar sector, long the brightest star in silver’s industrial demand story, is rapidly turning away from the metal. Silvers share of module costs has ballooned from around 3% in 2023 to between 17% and 29% today — a jump that has spurred a wave of substitution. Longi Green Energy will begin mass-producing back-contact cells that use copper instead of silver from the second quarter. Jinko Solar is scaling up copper-based panel production, and Shanghai Aiko Solar has already launched silver-free cells. The numbers are stark: silver consumption by the photovoltaic industry fell 6% in 2025 to 186.6 million ounces, and the sector expects a further 19% drop in 2026 to roughly 151 million ounces.

Thrifting amplifies the demand erosion

Even outside solar, the high price of silver is forcing a broader belt-tightening. Manufacturers across electronics, automotive and AI hardware are “thrifting” — cutting the silver content per chip, per solar cell, per component. The Bank of America has slashed its 2026 deficit forecast by up to 90% as a result. UBS followed suit, trimming its projection from 300 million ounces to between 60 million and 70 million ounces, a reduction of 80%. The message is clear: the deficit narrative that propelled silver bull arguments for years is losing steam.

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

Analyst divergence widens

Forecasts for 2026 now span an extraordinary range. HSBC sees silver at $75, while BMO is at the opposite end with $220. Citigroup expects $110 in the second half of the year, Bank of America pencils in an average of $85.93, JPMorgan sits at $81, and UBS has become notably bearish — $85 by end-Q2, $85 by September, $80 at year-end and just $75 by March 2027. Such dispersion reflects deep uncertainty about how fast the demand shift will play out.

Macro headwinds tighten the vice

The macro backdrop offers little relief. The US PCE price index rose 3.8% year-on-year in April, the steepest increase in three years. Energy prices jumped 17.9%. Higher interest rates make yield-bearing assets more attractive, and the CME FedWatch tool now prices in zero rate cuts for 2026. The first-quarter GDP revision came in at 1.6%, down from the initial 2.0%, implying weaker economic momentum that could further dampen industrial demand. The FOMC meeting on June 16-17 looms large; a hawkish dot plot could extend the consolidation into the third quarter. Only a hint of a possible September cut might revive momentum.

Technical levels offer a roadmap

On Friday, silver crossed above its 50-day moving average at $75.78. The immediate hurdle is $76.01. A sustained break above that could open the path to the 20-day line at $77.92, then $78, and eventually the 100-day at $81.15. On the downside, support sits at the May low of $73.09 and the $70.87 level. The metal is up 4.93% year-to-date but remains 35% below its 52-week high of $116.89, set on January 28.

A structural floor — but no fuel

The silver market is not in balance. The Silver Institute projects a sixth consecutive deficit this year of around 46 million ounces, and cumulative draws since 2021 total nearly 762 million ounces. Because roughly 70% of supply comes as a byproduct of base-metal mining, it cannot ramp up quickly in response to price. That structural underpin provides a floor. But with the solar industry in retreat, thrifting accelerating, and the Federal Reserve holding rates high, the catalyst for a sustained breakout remains elusive. The ISM manufacturing index on June 1 and the services PMI on June 3 will offer the next clues on industrial demand, followed by May CPI data on June 10 and the FOMC decision later in the month. Until then, silver is stuck in a gridlock of its own making.

Ad

Silber Preis Stock: New Analysis - 31 May

Fresh Silber Preis information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Silber Preis analysis...

en | XC0009653103 | SILVER’S | boerse | 69457279 |