2026 SILVER MARKET MACROECONOMIC ANALYST REPORT

MARKET CONTEXT AND PRICE DYNAMICS
The silver market entered 2026 in a state of extreme physical tightness. Following a historic 2025 breakout where prices surged over 140 percent, silver reached a peak above 100 USD per troy ounce in January 2026. As of late February 2026, the price has established strong technical support in the 77 USD to 87 USD range. Analysts from JP Morgan and Citigroup project 2026 average prices between 79.50 USD and 81 USD, representing a permanent structural re rating from historical norms.

THE SIXTH CONSECUTIVE ANNUAL SUPPLY DEFICIT
2026 marks the sixth consecutive year where global demand exceeds mine production and recycling.
The 2026 projected deficit is approximately 67 million ounces.
While total supply is forecast to rise 1.5 percent to a decade high of 1.05 billion ounces, it remains insufficient.
Mine production is expected to reach 820 million ounces, driven by primary silver growth in Mexico and Morocco, alongside byproduct gains from gold and polymetallic mines in Canada and China.
Recycling is expected to hit a 13 year high, exceeding 200 million ounces as high prices incentivize the scrap of silverware and industrial components.
Above ground inventories at Western vaults like COMEX have fallen to multi decade lows, with registered stocks dropping below 90 million ounces in February 2026. This creates a high risk of liquidity events and delivery squeezes.

SOLAR PV INTENSITY REDUCTION (THRIFTING)
The solar sector, historically the largest industrial consumer of silver, is undergoing significant technological shifts.
High silver prices (accounting for up to 29 percent of module costs) have accelerated thrifting. Manufacturers are increasingly using silver coated copper or pure copper substitution.
Silver demand from PV is expected to fall to approximately 194 million ounces in 2026, a 7 percent year over year decline despite a 15 percent increase in global solar installations.
Newer architectures like TOPCon and Heterojunction (HJT) remain more silver intensive than older PERC cells, which provides a floor for demand even as per unit intensity drops.

OFFSETTING DEMAND VECTORS: AI DATA CENTERS AND EV INFRASTRUCTURE
The reduction in solar silver intensity is being fully absorbed by the rapid expansion of the digital and electric economy.

1. AI DATA CENTERS AND COMPUTING HARDWARE
Data center power capacity has surged over 50 fold since 2000, reaching nearly 50 GW in 2026.
AI specific servers and GPUs (e.g., Nvidia H200/B200 architectures) require 2 to 3 times more silver than traditional servers for precision contacts, busbars, and electromagnetic shielding.
Demand in this sector is price inelastic; the cost of silver is negligible compared to the billions invested in AI clusters, ensuring steady offtake regardless of metal price volatility.
2. EV INFRASTRUCTURE AND AUTOMOTIVE ELECTRIFICATION
Silver intensity per vehicle continues to rise as the market shifts toward Battery Electric Vehicles (BEVs), which use 67 to 79 percent more silver than internal combustion engines.
Automotive silver demand is projected to reach 94 million ounces in 2026.
Charging infrastructure is a massive secondary driver. High speed DC chargers and grid upgrades require significant silver for power electronics and high reliability connectors.
Gartner predicts EVs on the road will increase 30 percent in 2026, reaching 116 million vehicles globally.

MACRO ANALYST SUMMARY
The silver market has transitioned from a precious metal following gold to a strategic industrial commodity. The "solar thrifting" narrative is no longer a bearish catalyst because the AI revolution and EV infrastructure have created a diversified industrial base. With inventories depleted and supply inelastic (as 70 percent of silver is a byproduct of other mining), the 2026 deficit ensures that price corrections are likely to be met with aggressive physical buying from industrial end users.
#xag #silver