Deutsche Bank Warns of Silver Surplus by 2027

Deutsche Bank predicts that the silver market could shift from scarcity to surplus as early as 2027. The bank's metals analyst, Daniel Ghali, anticipates spot prices for silver to average $70 per ounce by the second quarter of 2027, falling below levels seen in early 2026. This outlook contrasts sharply with the physical shortage observed last October, when tight supplies drove borrowing costs to extreme levels and briefly pushed silver prices above $120 per ounce early this year.

Current silver inventories are rising, with over 914 million ounces now stored in London’s commercial vaults, including more than 300 million ounces freely available for purchase. This marks a 70% increase in freely available supply since October 2025, significantly reducing concerns over metal scarcity. The trend is also reflected in inventories at the Chicago Mercantile Exchange warehouses and in Shanghai, attributed to recycling, private vault holdings, and weaker demand.

The shift to surplus is driven by declining industrial demand, particularly in solar manufacturing. Deutsche estimates global silver consumption in solar applications will drop by more than 20% this year, with Chinese demand falling 33%. Manufacturers are cutting silver use through improved production methods, such as thinner electrical contacts and copper-coated silver pastes, reducing silver consumption per solar cell by 17% in 2026.

With peak scarcity now in the past, investment demand will play a crucial role in silver’s price outlook. Deutsche estimates that silver-backed funds could release about 40 million ounces by December 2027, following patterns seen during previous U.S. Federal Reserve interest-rate increase cycles. However, the outlook for China remains uncertain, as silver prices there carry a persistent premium despite weaker wholesale demand and rising inventories.