Record silver demand strains supply

The silver market is projected to be in a structural deficit for the sixth consecutive year in 2026. The global market has seen a cumulative shortfall of nearly 800 million ounces since 2021 as demand consistently outpaces new supply. A primary challenge for increasing supply is that approximately 70% of silver is extracted as a byproduct of mining for other metals like copper, lead, and zinc. This makes silver production relatively inelastic, meaning output cannot ramp up quickly even when silver prices rise. Mexico is the world's largest silver producer, followed by China and Peru. While Peru holds the largest reserves, China controls an estimated 70% of global refined silver supply, a factor that prompted the U.S. to add silver to its Critical Minerals list. Beyond solar panels, the demand surge is bolstered by other green economy applications, including vehicle electrification and power grid infrastructure. Electric vehicles can use two to three times more silver than an internal combustion engine car. Recycling is growing in importance, hitting a 12-year high in 2024 and now accounting for over 23% of total supply. However, overall recycling rates remain moderate at 45-55% because the tiny amounts of silver used in countless electronic devices are difficult and often uneconomical to recover. Major silver mining companies are working to meet the demand, including Mexico-based Fresnillo, the world's top silver producer, as well as Pan American Silver and First Majestic Silver, which have significant operations across the Americas. The persistent supply-demand imbalance has led to bullish price forecasts, with some analysts projecting silver could average more than double its 2025 price in 2026.