Silver is facing a critical juncture as traders debate whether the metal is heading toward peak scarcity or a structural squeeze. After a dramatic 147% surge in 2025, reaching a high of $120 an ounce, silver has since retreated, now trading around $55.6. The iShares Silver Trust (NYSE:SLV) is down over 23% year-to-date, with key support at $54.5 just below current levels.
The fundamental outlook for silver is divided. Bulls argue that the market will experience a sixth consecutive annual deficit, widening from 40.3 million ounces in 2025 to 46.3 million. Supply constraints are expected to persist, with mine output remaining flat and total supply slipping about 2%. Positive forecasts from the LBMA’s annual conference predict silver could hit $97 within 12 months, supported by strong physical demand in China.
However, bears like Deutsche Bank’s Daniel Ghali argue that peak silver scarcity is behind us. Solar industry shifts are reducing silver demand, with usage per cell set to drop 17% in 2026. Additionally, London vaults hold around 914 million ounces, with freely available metal increasing by 70% over the past year. Deutsche Bank anticipates a surplus as early as 2027, with prices averaging $70 by Q2 2027, potentially influenced by Fed policies and reduced Indian imports.