Silver is getting hit harder than gold in the current correction, and that is telling you something about the market structure. COMEX silver futures settled at $57.65/oz on July 14, down $2.15 or 3.6% in a single session. Month-to-date, silver has lost 16.85%, more than double gold's decline over the same period. The gold/silver ratio has widened to approximately 69, up from the low 60s in May, reflecting silver's higher beta to the macro selloff.
The divergence between price action and physical fundamentals could not be wider. The Silver Institute's World Silver Survey 2026 confirmed that 2025 marked the fifth consecutive year of market deficit, with industrial consumption exceeding mine supply by a growing margin. Total silver demand reached 1.2 billion ounces in 2025, while mine supply has been essentially flat at around 820 million ounces since 2020. The gap is filled by above-ground stocks, which are drawing down steadily. CPM Group projects the deficit to persist through at least 2028.
Silver's supply inelasticity is structural, not cyclical. Approximately 70% of global silver production comes as a by-product of copper, lead, and zinc mining. This means silver mine output does not respond to silver prices — it responds to base metal production decisions. With copper mine output constrained by declining ore grades and project delays, by-product silver supply faces headwinds regardless of how high silver prices go. This is the fundamental reason the deficit persists through price cycles.
Industrial demand is the engine, and it is accelerating. Photovoltaic manufacturing consumed a record 270 million ounces of silver in 2025, up from 230 million in 2024, driven by global solar installations exceeding 600 GW for the first time. Electronics and electrical applications consumed another 360 million ounces. Battery manufacturing, particularly for silver-zinc and silver-oxide batteries in aerospace and defense applications, is a smaller but fast-growing segment. The energy transition is structurally bullish for silver in a way it is not for gold.
Investment demand is where the weakness sits. Silver ETFs saw outflows in May and June as the macro repricing hit all precious metals indiscriminately. COMEX managed-money silver positioning was modestly short entering July, which creates the potential for a squeeze if the macro narrative shifts. But right now, the macro tailwind that carried silver from $30 to $60 in 2025 — falling real rates, a weak dollar, and broad monetary demand — has fully reversed.
JP Morgan Global Research projects silver averaging $81/oz in 2026, more than double its 2025 average. Goldman Sachs forecasts a range of $85-100/oz. These projections assume the industrial demand story overwhelms monetary headwinds in the second half of the year. But the first half of 2026 has not cooperated. Silver rallied to an all-time high near $68 in early 2026 before the correction began, and has since given back nearly 15%. The bullish case requires either a Fed pivot or industrial demand to accelerate enough to draw down inventories to critical levels.
The latter is happening, but slowly. Above-ground silver inventories tracked by the London Bullion Market Association (LBMA) and COMEX have declined steadily. COMEX registered silver inventories fell to 280 million ounces in June, down from 350 million in January. LBMA vault holdings are at their lowest since 2020. At current drawdown rates, visible inventories cover approximately 11 months of global industrial consumption — down from 18 months in 2022. This inventory trajectory is the structural bull case for silver, regardless of where the macro pendulum swings in any given quarter.
For procurement teams that buy silver for industrial applications — solar manufacturing, electronics, brazing alloys, or chemical catalysts — this correction is a buying opportunity, not a reason to delay. The structural deficit means every dollar lower is a discount that will not persist once the macro narrative turns. Lock in fixed-price contracts for H1 2027 delivery at current levels if your suppliers offer them. The risk of waiting is that a Fed pivot or positive economic data triggers a relief rally of 10-15% in a matter of days, as silver tends to move with higher velocity than gold in both directions. For teams managing silver price exposure as a financial hedge, maintain positions but expect continued volatility through Q3. The gold/silver ratio near 69 suggests silver is undervalued relative to gold on a historical basis, but the ratio can widen further before it narrows.