Silver Is in Its Sixth Deficit Year and the 2026 Gap Just Got 15% Bigger

The silver price is moving through 2026 with more volatility than usual, but the underlying story is relatively clear. The market is heading into its sixth straight year of supply deficit. This is even as the gold price remains firm on safe-haven demand. At the same time, broader factors like de-dollarization trends and the ongoing Iran war are shaping both investor sentiment and industrial demand in uneven ways.

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762 Million Ounces Drawn From Global Stocks Since 2021 as Coin Demand Jumps 18%

According to the Silver Institute’s latest report released on April 15, the global silver market is expected to see a 46.3 million ounce deficit in 2026. It is up 15% from 40.3 million ounces last year. Since 2021, about 762 million ounces have been drawn from above-ground stocks to meet demand.

Price action in the first quarter reflects how tight conditions have become. Silver started the year around $74 per ounce. It rose sharply through January, crossing $100 on January 26 and reaching a record high near $121.62 days later. The rally was supported by strong investment demand and expectations of looser monetary policy.

However, prices corrected quickly in early February after a shift in US policy expectations signalled tighter financial conditions. By March, the Iran war added further pressure. Geopolitical tensions typically support precious metals. This means higher oil prices and inflation reduced expectations of rate cuts, which weighed on silver. Prices briefly dropped to around $61 before recovering toward $75 by the end of the quarter.

On the demand side, the picture is mixed. Industrial fabrication is expected to fall 3% to a four-year low, reflecting slower global growth. In contrast, investment demand remains strong, with coin and bar demand rising 18%, supported by renewed buying in the US.

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Supply Deficit Deepens Despite Short-Term Price Volatility

Supply is also under pressure. Total output is forecast to decline by 2% in 2026. China’s move to restrict silver exports from January and the US decision to classify silver as a critical mineral have added to concerns about availability.

Overall, the market remains in deficit, with demand continuing to exceed supply. While short-term price movements have been uneven, the broader supply-demand balance suggests continued tightness in the market.

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