Commodities Research Note: 2026 Silver Market Outlook

Top Three Structural Drivers of the 2026 Silver Supply Deficit

1. Inelastic Byproduct Supply Constraints
Approximately 70 percent of global silver production is a byproduct of base metal mining (primarily copper, zinc, and lead). Consequently, silver supply is decoupled from its own price action. Even with silver prices reaching historic highs in early 2026, mine output remains stagnant because production decisions are driven by the economics of the primary base metals. Stagnating or declining ore grades at mature base metal operations in Mexico and Peru further restrict the ability of miners to ramp up silver output in response to the current deficit.
2. Surge in AI-Driven Hardware Demand
Artificial Intelligence infrastructure has emerged as a primary industrial consumer. Silver's unmatched electrical and thermal conductivity makes it essential for the high-performance hardware stack required by data centers, including GPUs, accelerators, advanced printed circuit boards (PCBs), and ultra-fast interconnects. Unlike the solar sector, where thrifting (reducing silver content) is a growing trend to manage costs, AI applications remain relatively price-insensitive due to the critical performance requirements of the hardware.
3. Persistent Multi-Year Inventory Depletion
2026 marks the sixth consecutive year of a structural silver supply deficit. This sustained imbalance has systematically drained global above-ground inventories. With London (LBMA) and New York (COMEX) vault stocks at multi-decade lows, the market lacks a sufficient physical buffer to absorb demand spikes. This physical tightness is evidenced by elevated lease rates and regional price premiums, particularly as China tightens export licenses for silver in early 2026.

Investment Bank Consensus Price Targets (Q3-Q4 2026)

Major investment banks have aggressively upwardly revised their price decks for the second half of 2026 to reflect the deepening structural imbalance.

J.P. Morgan
Target: $85.00 per ounce
Outlook: J.P. Morgan projects a "higher floor" for silver, with the fourth quarter expected to reach the highest quarterly average of the year. Their base case for the full year 2026 average sits at $81.00 per ounce, more than double the 2025 average.

Bank of America (BofA)
Target: $65.00 per ounce (Base) / $100.00+ (Bull Case)
Outlook: BofA forecasts a peak around $65.00 for the 12-month period ending in late 2026, supported by industrial demand. However, BofA analysts have also highlighted a "supercycle" bull case ranging from $135.00 to $309.00 if the gold-to-silver ratio compresses to historical extreme levels.

Citigroup
Target: High-$70s range
Outlook: Citi expects silver to continue outperforming gold through late 2026, citing the convergence of the "debasement trade" and the AI-driven industrial narrative.

Consensus Summary
The median analyst forecast for the Q3-Q4 2026 period centers around $79.50 to $85.00 per ounce. While technical volatility remains high—following a brief spike to $121.00 in January 2026—the fundamental consensus points to a sustained pricing regime significantly above pre-2025 norms.
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