As of February 2026, the silver market is characterized by a significant structural imbalance, driven by record-high industrial demand and rapidly depleting physical inventories. Silver is currently trading in a volatile range between 80 USD and 91 USD per ounce, having reached all-time highs above 120 USD in January 2026.

Macroeconomic Evaluation of Industrial Demand

Photovoltaic (PV) Cells:
The solar sector remains the primary engine of industrial silver demand. Global solar capacity is forecast to reach 665 GW in 2026, requiring approximately 120-125 million ounces of silver for panel production alone. While manufacturers continue to implement thrifting (reducing the silver content per cell), the sheer volume of new installations—bolstered by EU mandates for solar integration in new buildings starting this year—offsets these efficiency gains.

EV Infrastructure and Automotive:
Electric vehicles (EVs) and their supporting infrastructure are the second major industrial pillar. A typical battery-electric vehicle uses 25-50 grams of silver, roughly 70 percent more than internal combustion engines. With global EV sales projected to rise 30 percent in 2026 to 116 million vehicles, automotive silver demand is expected to reach 70-75 million ounces. This is further amplified by the expansion of fast-charging networks and grid upgrades, which contribute an additional 15-20 million ounces.

Inventory Levels and Supply Deficit Analysis

COMEX Inventories:
Data as of February 26, 2026, shows a critical tightening of supplies at the COMEX. Total inventories have plummeted to 360.64 million ounces, a 32 percent decline since October 2025. Most alarmingly, Registered stocks—the metal readily available for delivery against futures contracts—have fallen below the psychological 90 million-ounce threshold to approximately 86.1 million ounces. This creates a precarious paper-to-physical imbalance, as March open interest is estimated at nearly 230 million ounces, outstripping deliverable supply by nearly 3:1.

LBMA and Global Context:
The LBMA and the Silver Institute forecast a sixth consecutive annual supply deficit for 2026, projected at 67 million ounces. Total global supply is expected to rise only 1.5 percent to 1.05 billion ounces, constrained by the fact that 70 percent of silver is produced as a by-product of other mining (lead, zinc, copper), making it unresponsive to price surges.

Conclusion:
A supply deficit is not just imminent; it is currently being bridged by the depletion of above-ground stocks. The combination of structural industrial demand from the green energy transition and the "March Madness" delivery risk on the COMEX suggests a high probability of a physical liquidity squeeze in the first half of 2026.
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