COMEX silver futures declined 2.29% on Wednesday to settle at $73.58/oz, paring some of the gains from silver's recent rally. The precious metal remains up over 40% year-to-date, outperforming even gold's strong performance.
The fundamental case for silver continues to strengthen. The Silver Institute reports that 2026 will mark the sixth consecutive year of structural deficit, with industrial demand growth outpacing mine supply growth. The cumulative deficit over 2021-2026 is estimated at over 1,000 million ounces.
Industrial demand for silver is being driven by solar photovoltaic manufacturing, which now accounts for over 20% of total silver consumption. Each GW of solar panel capacity uses approximately 20 tonnes of silver in the form of silver paste for electrical contacts. Global solar installations are projected to exceed 500 GW in 2026.
On the supply side, global silver mine production has declined slightly to approximately 26,000 tonnes per year, as declining ore grades at primary silver mines and lower by-product output from base metal operations constrain available supply.
Silver's dual role as both an industrial metal and a monetary metal means it benefits from both the structural industrial demand story and the macro-driven gold rally. The gold-to-silver ratio has compressed to approximately 61:1, down from 90:1 in early 2024.
Silver's structural deficit means the long-term price trend is clearly higher. Industrial users should implement systematic hedging programs to lock in prices on dips. The gold-to-silver ratio compression suggests silver will continue to outperform gold.