Silver Research Lead Brief - February 25, 2026

Market Overview: XAG/USD is currently trading near 90.24, having recently breached psychological resistance at 90.00. The market is characterized by extreme volatility following a January peak of 121.67 and a subsequent correction.

Industrial Demand Analysis:
Photovoltaic (PV) Sector: Demand is undergoing a structural shift. While global solar capacity is expanding by 15 percent, silver demand in this sector is projected to decline 7 percent year-over-year to 194 million ounces. This is driven by aggressive thrifting and substitution as silver now accounts for 17 to 29 percent of module costs. However, high-efficiency TOPCon cells continue to rely on silver due to high-temperature fabrication requirements.
Electric Vehicle (EV) Sector: This remains a primary growth engine. EVs consume 67 to 79 percent more silver than internal combustion vehicles, averaging 25 to 50 grams per unit. Automotive silver demand is projected to grow at a 3.4 percent CAGR through 2031. For 2026, the sector is expected to help offset PV losses, particularly as 5G and AI infrastructure demand scales.

Gold-to-Silver Ratio (GSR):
Current ratio levels are hovering near 60:1 to 62:1, down significantly from 2025 highs of 100:1. Recent discussions on X ($XAG) highlight a compression trend as silver outperforms gold during the current "tariff turmoil." Technical analysts identify 60 as a pivot point; a breakout above this could signal a return to gold dominance, while a break below suggests a move toward the 40:1 historical "buy" zone.

Global Inventory and Supply Deficit:
COMEX Inventory: Stocks are under severe pressure. Registered silver inventories recently dropped below the 90 million ounce mark (88.2 million ounces as of February 20). Total COMEX inventories (registered and eligible) stand at 366.25 million ounces, a 31 percent decline since October 2025.
Supply Deficit: The market is entering its sixth consecutive year of structural deficit. The Silver Institute projects a 67 million ounce shortfall for 2026. Cumulative deficits over the last five years exceed 800 million ounces, effectively removing one full year of global mine production from available stocks.
Paper-to-Physical Imbalance: COMEX open interest exceeds available registered stock by over 400 percent, raising the risk of a delivery squeeze as industrial users and institutional buyers like JP Morgan seek to secure physical bullion.
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