Silver Poised for Bigger Gains Amid Persistent Physical Deficit

Gold and silver prices slipped in early trade on Wednesday as investors assessed geopolitical tensions, higher crude oil prices, and the outlook for US interest rates. Gold fell 0.41% to $4,420.80 an ounce, while silver declined 0.21% to $66.86 on COMEX.

Silver is facing a persistent physical deficit, with a projected shortfall of 46.3 million ounces in 2026, wider than the 40.3 million-ounce deficit in 2025. Since 2021, a cumulative 762 million ounces has been drawn from above-ground stocks, and new mines can take close to a decade to move from permitting to production.

The supply response is slow due to most silver being produced as a by-product of copper, lead, and zinc mining. Photovoltaic silver consumption is forecast to fall 19% in 2026 to around 151 million ounces, but the decline is largely due to 'thrifting', using less silver per solar cell.

Silver's market structure is another reason Monarch PMS sees asymmetric upside. COMEX registered inventories stand at about 96 million ounces, with coverage of only 17.8% against outstanding paper claims and estimated paper leverage of around 5.6x.