COMEX silver settled at $62.26/oz on July 3, up 2.67 percent on the week, significantly outperforming gold's 1.18 percent gain. The Q3 2026 average stands at $61.00/oz. Silver's rally has been stronger than gold's since early 2025, with silver rising more than 100 percent from its early 2025 lows, driven by exceptionally strong industrial demand dynamics.
The Silver Institute's World Silver Survey 2025 documented a record industrial demand of 680.5 million ounces in 2024, the fourth consecutive annual record. Total demand reached approximately 1.16 billion ounces against total supply of approximately 1.01 billion ounces, producing a deficit of 148.9 million ounces — the fifth consecutive annual deficit, accumulating a multi-year shortfall of several hundred million ounces. Silver inventories, while not publicly reported at the same granularity as LME metals, are widely believed to have drawn down significantly.
The photovoltaic sector is the primary growth engine. PV silver demand rose from 11 percent of industrial demand in 2014 to approximately 29 percent in 2024, consuming roughly 232 million ounces annually. Despite ongoing thrifting — reducing silver content per solar cell — total silver consumed by the solar industry continues to grow as PV installations ramp globally. China alone installed over 300 GW of solar capacity in 2025 and is expected to install more in 2026. Electronics (connectors, switches, circuit boards) and automotive (electrical contacts, sensors) applications provide additional industrial demand growth. The Silver Institute expects industrial demand to remain near record levels through 2026, with further growth from EVs, grid infrastructure, and data center/AI hardware through 2030.
On the supply side, global silver mine production is constrained. Approximately 70-75 percent of silver output comes as a by-product of copper, lead, and zinc mining. This means silver supply is heavily dependent on base metal mining economics, which are determined by base metal prices, not silver prices. Primary silver mines account for only about 25-30 percent of production and face the same permitting and depletion challenges as other mining sectors. Recycling supply is responsive to price but insufficient to close the structural deficit.
The gold-silver ratio has compressed to approximately 67:1, reflecting silver's outperformance. Historically, ratios above 80:1 have signaled silver undervaluation relative to gold; ratios below 60:1 have signaled silver overvaluation. At current levels, the ratio suggests silver is fairly valued relative to gold on historical norms, but the structural deficit argument supports continued upside.
Price forecasts for 2026 are heavily skewed to the upside. The World Bank expects precious metals prices, including silver, to remain elevated. Institutional estimates suggest silver could average $58-68/oz for 2026, with upside scenarios to $75-80/oz if industrial demand accelerates or supply disruptions occur. The structural deficit, combined with rising gold prices and strong industrial demand growth, creates a favorable environment for silver relative to other precious metals.
Silver is the most volatile precious metal, and the volatility has a fundamental driver: silver is both a monetary asset and an industrial commodity. The industrial demand component — which now accounts for approximately 56 percent of total demand — is structurally growing. Photovoltaics consumed approximately 232 Moz in 2024, roughly 34 percent of industrial demand and 19 percent of total demand. PV manufacturing is scaling rapidly; even with thrifting (reducing silver content per cell), total silver consumed by the solar industry will rise. This creates a structural deficit that the Silver Institute estimates at approximately 149 Moz for 2024. For industrial buyers, the procurement strategy should be to lock in lease rates and fixed-price forward contracts for up to 70 percent of expected 2027 consumption. Unlike gold, where central bank demand creates a soft price floor, silver's price is driven by the intersection of industrial demand growth and supply constraints — and both are converging in a way that suggests prices will trend higher over the next three years.