Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
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The silver market has taken investors for a wild ride over the past few years. Following a strong 2025, prices skyrocketed to record-highs in the first quarter of 2026, even outpacing gold’s stellar gains.
The Silver Institute’s World Silver Survey for 2026, a leading source of market data, couldn’t come at a better time to help investors make sense of the shiny metal’s historic performance, how it reflects real-world conditions, and what it means for prices moving forward.
Let’s take a closer look at what’s actually happening beneath the headlines.
A Half-Decade Deficit Is Reshaping the Market
The silver market has been in a consistent deficit for the past several years, indicating that demand reliably outstrips supply. 2025 marked the fifth consecutive year of shortfalls, with a 40.3 million ounce (Moz) split between total purchases and available inventory.
This deficit persisted despite total supply rising by 7% year over year and demand falling by 2% over the same period, highlighting the vast gulf between global consumption and accessible resources. The Silver Institute predicts that 2026 will extend this entrenched deficit to six straight years, with the anticipated shortfall reaching 46.3 Moz.
Silver Demand is Up For Both Paper and Physical Products
Silver purchases are on the rise for both paper and physical investments, underscoring the metal’s rising status as a core portfolio addition for institutional and retail investors.
Physical Demand Across the Board
In 2025, physical demand jumped by 13%. This was mirrored by a 14% increase in purchases of silver coins and bars. Buyers in India, Europe, East Asia, and the Middle East were particularly active, suggesting North American investors may remain behind the curve. This notable increase in physical demand strained supplies around the globe, resulting in product shortages, rising dealer premiums, and several silver squeeze scenarios.
Institutions Flooded Paper Markets
While retail demand has centered on physical silver products, institutional participation has gravitated towards paper silver. Global inflows into silver exchange-traded products (ETPs) reached 273 Moz in 2025, a 26% jump from the prior year, bringing total holdings to 1.3 billion ounces. This climb in institutional demand is reflected by enhanced trading volume, with CME micro silver contracts surging 150% and turnover at the LBMA reaching 32% year over year.
Industrial Demand Softens, But Future Increases Anticipated
While retail and institutional demand rose in 2025, industrial consumption fell by 3%. Furthermore, photovoltaic demand, which represented a growing portion of overall purchases, slid by 6%. This relative weakness underlies a backdrop of persistent demand, reinforcing silver’s central role as an industrial workhorse.
The industrial softness hasn’t been enough to correct the supply-demand imbalance and is unlikely to do so in the future. Emerging demand sources, such as AI infrastructure, EVs, and electric grid technologies, are projected to steadily expand silver’s manufacturing footprint. Solar panels alone are expected to compose nearly 100% of the available silver supply by 2050.
Total Supply Increases Yet Still Lags
The global silver supply did increase by a considerable 7% from 2024 to 2025, but the resulting 1,090.4 Moz still fell under elevated demand. Furthermore, the Silver Institute expects the total silver supply to fall by 2% in 2026, setting the stage for another deficit.
Here’s how the multi-source demand broke down:
Mine Production
Mine production rose 3% to 846.6 Moz in 2025 but remains uneven and is expected to edge lower in 2026. Further complicating the matter, nearly two-thirds of the silver supply is a byproduct of mining other metals, leaving the overall supply largely unresponsive to silver prices and structurally constrained.
Recycling
Silver recycling, which measures how much physical product reenters the supply, reached 197 Moz in 2025, moving only 2% year over year. 2026 is expected to see a 7% rise, but not enough to close the gap between supply and demand.
A Thinner Market Means Bigger Price Moves
The Silver Institute paints a clear picture for the silver market in 2026, one characterized by long-running deficits, declining inventories, rising physical demand, and limited liquidity. These factors create a perfect storm for upward price movement. As the report indicates, the silver market is in an “era of reduced stocks” as relentless consumption eclipses tepid supply.
This trend is likely to result in larger price swings than historically experienced. Investors saw this first-hand in 2025 and the beginning of 2026, when the average silver price jumped 42% year over year before reaching an all-time high near $120 in January. The silver price predictions for this year are exceptionally bullish, indicating further growth on the horizon.
If you’d like to learn more about how silver can protect your portfolio, check out our FREE silver report: Silver, A Sleeping Giant?