Silver Price Prediction: Industrial Demand Trumps Monetary Metal Myth
Investors have been surprised by silver's price performance in wartime, which has bucked conventional wisdom. Despite being expected to surge as a safe-haven asset during times of conflict, silver has crashed 52% from its January 29 record of $121.62 to roughly $57.79 on July 30, 2026.
The reason for this unexpected downturn is that 58% of silver demand is industrial, not monetary. This means that when a hawkish Federal Reserve attacks growth expectations, it affects the factories and industries that use silver, rather than driving up its price due to fear or inflation.
When the US-Iran war began in February, oil prices spiked through the Strait of Hormuz, hardening the Fed's stance. This caused the 2026 rate-cut projection to be revised from two cuts to one, which hit industries such as solar panels, semiconductors, and EV components that use silver.
UBS strategists Wayne Gordon and Dominic Schnider cut their 2026 supply-deficit estimate by ~80%, citing a 20% photovoltaic demand fall and a 70Moz drop in ETF holdings. Despite this reduced deficit, the market is still short physical metal, with a cushion that has changed from a squeeze narrative to a tight market.