Deutsche Bank Sees Silver Surplus Looming in 2027
Deutsche Bank predicts that the silver market will shift from deficit to surplus as early as 2027, driven by rising stockpiles and declining industrial demand. Daniel Ghali, the bank's metals research head, expects spot silver prices to average $70 per ounce by the second quarter of 2027, down from the highs seen in early 2026. As of early October 2026, silver was trading at $60.99 per ounce, reflecting a 14% decline since the start of the year but still 26% higher than a year prior.
The bank's outlook contrasts with the supply scarcity seen in late 2025, when borrowing costs for silver surged due to limited availability. Ghali noted that the period of maximum scarcity has passed, citing substantial increases in readily available silver in London's commercial vaults, up 70% since October 2025. Similar trends were observed in Chicago Mercantile Exchange and Shanghai warehouses, suggesting broader metal availability.
Deutsche Bank attributes the impending surplus to weakening demand, particularly in solar manufacturing. Global silver usage in solar applications is projected to drop by over 20% in 2026, with Chinese demand falling 33%. Producers are reducing silver consumption through advancements like thinner electrical contacts and copper-plated pastes. Elevated silver prices, which once accounted for over 30% of solar-module production costs, have accelerated these cost-cutting measures.
With industrial demand waning, investment flows will play a larger role in silver's price trajectory, according to Ghali. The bank forecasts that silver-backed funds could unload around 40 million ounces by December 2027, mirroring patterns from past Federal Reserve interest-rate hike cycles. However, China remains an uncertainty, as silver prices there maintain a premium despite weakening wholesale demand and rising inventories.