Silver Tumbles Below $65 as Fed Hawks and Solar Cost-Cutting Collide with Supply Deficit
19.06.2026 - 19:25:20 | boerse-global.de
Silver is enduring a brutal week, caught between a resolutely hawkish Federal Reserve and a sweeping technological shift in its largest industrial application. The white metal slid to $64.26 a troy ounce on Friday, extending a sell-off that began after the US central bank signalled further rate increases lie ahead. That marked a daily decline of roughly 2% and pushed the weekly loss to 5%.
The rout kicked off in earnest on June 18, when silver plunged 3.4% to $65.58, following the Fed’s decision to leave the federal funds rate unchanged at 3.5%?–?3.75%. Several Federal Open Market Committee members indicated that additional tightening may be required in 2026, while the central bank’s favoured inflation gauge — the PCE index — is now projected to hit 3.6% this year, up sharply from the 2.7% forecast in March. The immediate market response was a jump in both Treasury yields and the US dollar, a toxic combination for an asset that offers no interest.
Compounding the pressure from monetary policy, the silver market is grappling with a structural shift in photovoltaic manufacturing. Silver now accounts for as much as 29% of the cost of a solar module, compared with just 3% in 2023. That has spurred a frantic search for cheaper alternatives. China’s Longi Green Energy, the world’s largest solar-cell producer, has already begun replacing silver with copper in its latest cell designs. According to the Silver Institute, consumption by the photovoltaic industry fell to 186.6?million ounces last year, and new printing techniques and layout optimisations could save an additional 20% going forward.
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Yet beneath these near-term headwinds, the fundamental supply picture remains strikingly tight. The global silver market is headed for its sixth consecutive annual deficit in 2025, this time of roughly 46?million ounces. Overall industrial demand is forecast to contract by 3%, but production — largely a by-product of copper and lead-zinc mining — is not responding to the price decline. Global output is nudging above 1?billion ounces and recycling has reached its highest level since 2012, yet the gap persists.
That scarcity is drawing in bargain hunters. The gold-to-silver ratio has jumped to 62 this month, a level that historically signals the white metal is undervalued relative to gold. Physical investment demand for silver is expected to surge 20% this year, as retail and institutional buyers swoop in at the lower prices. Meanwhile, Chinese import data underscores the metal’s industrial heft: in March alone, the country took in 836?tonnes of silver, a staggering 173% above the ten-year seasonal average, driven by the solar supply chain and private investors seeking a cheaper alternative to gold.
The tug-of-war between the Fed’s restrictive stance and a structurally deficit market leaves silver at a precarious crossroads. For now, the dollar’s strength and the threat of further rate hikes are dominating price action. The Fed’s chairman, Kevin Warsh, has reiterated the central bank’s unwavering commitment to price stability, keeping the opportunity cost of holding non-yielding assets painfully high. Until the rate outlook turns decisively dovish, the metal’s industrial underpinnings will struggle to break through the macro fog — but the deficit ensures that any shift in policy sentiment could trigger a sharp reversal.
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