Silver at $60/oz as Sixth Consecutive Deficit and COMEX Inventory Squeeze Reshape Market Structure

Silver is trading at $60.09/oz on COMEX as of July 1, 2026, up 3.29% on the day. The metal has corrected sharply from its January all-time high of $121.64/oz. At current levels, silver is down 50% from its peak, but the structural supply deficit narrative remains intact. The gold-silver ratio sits at roughly 67:1, suggesting silver is historically undervalued relative to gold, which trades near $4,045/oz.

The Silver Institute projects 2026 will be the sixth consecutive year of global silver deficit, with a shortfall of approximately 67 million ounces. Cumulative deficits from 2021 through 2026 total an estimated 820 million ounces. This persistent drawdown has steadily eroded above-ground inventories tracked by COMEX and the LBMA. The Institute's research emphasizes that industrial demand remains at record levels, while mine supply is struggling to respond.

COMEX registered inventory coverage is at 13.4% of open interest - a level that finance analysts describe as a potential trigger for supply squeeze conditions. A persistent 12-13% premium on the Shanghai Futures Exchange further signals physical tightness in the Chinese market. In such conditions, even modest increases in investment or industrial demand can trigger outsized price moves. Analysts at Finance Magnates note that the convergence of physical tightness and structural industrial demand creates conditions where a relatively small increase in physical demand could force a significant repricing.

Industrial demand is the structural backbone of the silver market. Solar photovoltaic manufacturing, electric vehicles, and AI data center infrastructure consume an estimated 700 million ounces annually. Unlike gold, which is largely held as a store of value, silver is increasingly critical in high-performance hardware where its unmatched electrical conductivity is irreplaceable. The AI data center build-out is creating what analysts call an AI tax on silver demand, as high-performance computing requires silver in connectors, circuit boards, and thermal management.

Silver mine supply is structurally constrained. Global mine production is effectively flat at 813-840 million ounces per year. Approximately 70% of silver is produced as a by-product of copper, zinc, and lead mining, meaning supply does not respond quickly or proportionally to silver price increases. New primary silver mines take a decade or more to develop, making supply unusually inelastic. This rigidity is already visible in exchange inventories. Registered stocks have fallen to multi-year lows, with tight physical availability reflected in higher lease rates and sporadic delivery stress.

Investment demand adds another dimension. The Saudi Central Bank has been buying silver ETFs, including the iShares Silver Trust and the Global X Silver Miners ETF, with combined holdings exceeding $40 million, indicating continued interest by sovereign investors. Overall ETF inflows exceeded 95 million ounces in recent periods. Peel Hunt raised its full-year 2026 silver forecast to $75/oz, up 79% from its prior estimate of $42/oz, and raised its long-run estimate from $30/oz to $50/oz.

Forecast ranges for 2026 are extremely wide, reflecting genuine uncertainty. HSBC forecasts a 2026 average of $68.25/oz with a $58-$88 range. JP Morgan's base case clusters near $81/oz. The bull case, driven by gold-silver ratio compression and AI-driven industrial demand, targets $100-$150/oz. An Iran ceasefire agreement in June 2026 sent silver up 4.09% in a single session to $70.98, with the gold-silver ratio compressing to 61.6 as renewed risk appetite combined with an improving industrial demand outlook.

The bear case cannot be dismissed. Silver has already corrected 50% from its January peak of $121.64. If global macro conditions deteriorate significantly, silver could test the $54 support level identified by technical analysts. A global economic slowdown would hit industrial demand for silver harder than gold, since silver has both investment and industrial demand drivers. The metal's dual character - monetary hedge and industrial input - means it can sell off faster than gold in risk-off environments.

The more interesting question for H2 2026 is not whether silver can trade above $60, but whether it can stay above $70. From a structural perspective, the answer increasingly looks yes. Industrial demand is sticky, supply is constrained, and above-ground inventories offer little buffer. Once $70 becomes the clearing price for physical demand, it tends to attract buyers on weakness rather than sellers on strength. The Silver Institute projects the structural deficit continuing through at least 2026, which provides a firm floor under prices even if speculative froth continues to unwind.

For procurement teams, silver presents a unique profile: it is the only precious metal with both significant industrial consumption and monetary demand. The industrial component makes it more sensitive to the economic cycle, but also provides a demand floor that gold lacks. The current pullback from $121 to $60 represents a 50% correction that has brought prices back toward levels where industrial buyers historically step in.