Deutsche Bank sees silver surplus looming by 2027

Deutsche Bank predicts a potential silver surplus as soon as 2027, driven by rising inventories and declining industrial demand. Daniel Ghali, head of metals research at Deutsche, forecasts spot prices to average $70 per ounce by the second quarter of 2027, remaining lower than levels seen in early 2026. This outlook contrasts with the physical shortage observed in October 2025, when tight supplies and geopolitical tensions briefly pushed silver prices above $120 per ounce.

As of early Monday afternoon, silver was trading at $60.99 per ounce, down about 14% since the start of 2026 but still 26% higher than a year ago. Ghali notes that inventories in London, Chicago Mercantile Exchange warehouses, and Shanghai have surged, providing ample cushion against shortages. The freely available supply in London has increased by 70% since October 2025, reflecting broader trends in recycling, private vault holdings, and weaker demand.

The primary driver of demand destruction is the solar manufacturing industry, where silver consumption is expected to drop by more than 20% this year. Manufacturers are reducing silver use through thinner electrical contacts and other production methods, cutting consumption per solar cell by an estimated 17% in 2026. High silver prices have accelerated these changes, with silver costs accounting for over 30% of solar-module manufacturing expenses earlier this year.

With peak scarcity now in the past, investment demand will play a larger role in silver's price outlook. Deutsche estimates that silver-backed funds could release about 40 million ounces by December 2027, mirroring patterns from previous U.S. Federal Reserve interest-rate hike cycles. However, uncertainties remain, particularly in China, where silver prices carry a persistent premium despite weaker wholesale demand and rising inventories.