On July 29, 2026, the Silver Institute released its latest annual supply-demand report, revealing that the silver market will see the largest supply gap in nearly a decade, with the gap expected to reach 180 million ounces, far exceeding last year's 120 million ounces. The report pointed out that industrial demand for silver from the photovoltaic sector surged 35% year-on-year, becoming the core driver of demand. Boosted by this news, spot silver prices in the Asian trading session quickly rose to $30.25 per ounce, up over 3% intraday, hitting a new high since 2024.
Supply-Demand Gap Widens: Weak Supply Growth vs Demand Explosion
The report analyzed the latest developments on both sides of global silver supply and demand. On the supply side, global silver mine production is expected to grow by only 1.5% in 2026 to 850 million ounces, with the main increase coming from new mines in Mexico and Peru. However, declining ore grades at some older mines and tighter environmental policies have constrained capacity releases. Recycled silver recovery is about 220 million ounces, flat year-on-year, with limited growth in recycling channels. Total supply is about 1.07 billion ounces, while full-year total demand is expected to reach 1.25 billion ounces, leaving a supply gap of about 14.4% of demand.
Photovoltaic Silver: Largest Increment in Industrial Demand
Segmental demand data shows that photovoltaic silver usage became the biggest highlight. Global new photovoltaic installations are expected to exceed 500GW in 2026, with China, India, and the US as the main growth markets. Silver paste usage in photovoltaic cells continues to increase due to the technology route shift to N-type TOPCon and HJT, with silver consumption per watt rising about 20% compared to 2022. Full-year photovoltaic silver demand is expected to reach 350 million ounces, accounting for 28% of total demand, compared to only 15% in 2020. In addition, the automotive industry (especially electronic systems and sensors in electric vehicles) and the construction of 5G communication base stations contributed about 120 million ounces of industrial demand, up 8% year-on-year.
Gold-Silver Ratio Recovery: Silver's Industrial Attributes Highlighted
As silver prices broke above $30, gold prices were quoted around $2,450 per ounce during the same period, with the gold-silver ratio falling from 82 at the beginning of the month to 78, indicating silver is strengthening relative to gold. This ratio recovery mainly stems from silver's stronger industrial attributes. The global manufacturing PMI has been in expansion territory for three consecutive months, especially the expansion of the semiconductor and new energy industry chains, which directly boosted spot silver buying. COMEX silver futures positioning data shows that non-commercial net long positions increased to 52,000 contracts, a six-month high, indicating speculative funds are bullish on silver's outlook.
Outlook: Silver May Start Long-Term Upward Cycle
Many investment banks raised their annual average silver price forecasts after the report. Goldman Sachs raised its 2026 silver average price forecast to $28.5, pointing out that if photovoltaic installations continue to exceed expectations, silver prices could reach $35 by year-end. JPMorgan Chase emphasized that silver's financial and industrial attributes resonate, and driven by expectations of Fed rate cuts (although the Fed stood pat in July, the probability of a cut in September still exceeds 60%) and the global green investment wave, silver may be at the start of a new cyclical bull market. However, in the short term, investors should be wary of profit-taking and technical overbought pressure, as well as seasonal demand fluctuations in major consuming countries like India.
Asian Market Dynamics
Asia, as a center for silver consumption and trading, reacted positively to the report. The main silver futures contract on the Shanghai Futures Exchange hit the daily limit up, closing at 7,600 yuan per kilogram, up 6%. Silver futures on the Tokyo Commodity Exchange (TOCOM) also rose. Spot silver premiums in India rose from $0.5 per ounce last week to $1.2 per ounce, with jewelers and industrial users starting to actively replenish inventories. Analysts pointed out that the contradiction between silver supply and demand is unlikely to ease in the coming years, and investors can pay attention to allocation opportunities in related mining stocks (such as First Majestic Silver, Fresnillo ADRs listed in the US) and ETFs (SLV, SIVR).
