Silver traded above $63 an ounce in mid-September, a level that would have looked implausible for most of the past decade. Behind it sits a physical market the Silver Institute expects to run a supply deficit for the sixth consecutive year, with the 2026 shortfall forecast around 215 million ounces, the largest on record.
The awkward detail is what is happening on the demand side at the same time. Solar manufacturers, the single largest source of industrial silver growth, have been steadily engineering silver out of their cells, cutting usage per panel by roughly a fifth. The deficit is widening anyway.
Two different assets wearing one ticker
Gold is a monetary asset. Its price is a statement about real yields, currency confidence and central bank behaviour, and roughly nothing about industrial consumption. Silver is both a monetary asset and an industrial input, and the two halves answer to different masters.
The industrial half is solar, electronics, electric vehicles and brazing alloys, where silver is used because nothing else conducts as well. That demand is price-insensitive in the short run, because the silver in a finished device costs far less than redesigning the device. It becomes price-sensitive over years, which is exactly what the solar thrifting shows: a slow engineering response to a higher price.
The monetary half behaves like a leveraged version of gold. When gold rallies, silver usually rallies more, and when gold corrects, silver falls harder. Gold recently traded near $4,330 an ounce, down on the week; silver fell further on the same days.
Why supply does not respond
Whitmore's Watchlist:
SLV (iShares Silver Trust): Physical silver exposure, the cleanest read on the metal itself.
SIL (Global X Silver Miners ETF): Producer equities, which amplify metal moves because their costs are largely fixed.
WPM (Wheaton Precious Metals Corp.): A streaming company, taking metal exposure without operating mines.
Most silver is not mined on purpose. Around three quarters of it comes out of the ground as a byproduct of copper, lead and zinc mining, which means the production decision is made by a base metals company responding to base metals prices. A high silver price does very little to increase the volume of silver mined.
That is the structural reason deficits can persist for years rather than clearing in a season. Above-ground inventories absorb the gap, exchange stocks draw down, lease rates spike when they get thin, and the market becomes prone to sudden squeezes rather than orderly adjustment. Analysts have been warning about volatility rather than a steady climb, which is the right shape to expect from a market like this.
The other consequence is that silver miners are unusual equities. They are geared to a price they cannot influence through volume, with cost bases exposed to the same diesel and electricity inflation running through everything else this year.
Sizing it honestly
Silver rewards patience badly. Its drawdowns are deeper than gold's, its rallies are faster, and the deficit story has been true for five years without producing a smooth return. Anyone holding it as a monetary hedge is accepting considerably more volatility than gold to hedge the same thing.
Held as an industrial exposure it makes more sense, provided the position is sized for the volatility rather than the thesis. The thesis, that the world keeps needing more electrical conductivity and cannot mine silver on demand, is sound. The path is not.
The vehicle matters more here than with most assets. A physical trust owns metal and tracks it closely. A miner adds operational risk, cost inflation and jurisdiction, and can underperform a rising metal price badly if a mine disappoints. A streaming company sits in between, buying future production at a fixed price without running anything. Three quite different risks sold under the same theme.
The signal worth tracking is not the price but the inventory: exchange stocks and lease rates say whether the deficit is actually biting or being comfortably absorbed.
Whitmore's Take: A record deficit in a metal that is mostly mined as a byproduct is a real constraint, and it still does not make silver a smooth holding. Worth deciding whether you own it for the industry or for the monetary hedge, because those want different position sizes.
Written by Daniel Whitmore
Millionaire Insiders