An old market speculator's adage says to "always sell a hockey stick chart, because the right side of the pattern will be as steep as the left one."
That approach proved right for short-term silver traders. The metal has spent 2026 unwinding one of the most violent rallies in history. After surging 147% in 2025 and briefly topping $120 an ounce early this year, the metal now trades around $55.6, after dipping around 6% just today. Meanwhile, iShares Silver Trust
The spot price key support area at $54.5, which used to be resistance in October and November 2025, sits just below.
Yet the fundamental narrative is split between two opposing stories: one argues the market is short of metal, and another says it's about to get flooded with it.
The Bull Case: A Sixth Straight Deficit
According to the World Silver Survey 2026, the market will experience a sixth consecutive annual deficit. Additionally, the deficit will widen - from 40.3 million ounces in 2025 to 46.3 million.
Supply side offers little relief. Mine output should stay flat, and total supply should slip about 2%. The silver supply problem is well-studied. Pure silver projects are rare and seldom located in top-tier jurisdictions. Furthermore, most supply comes as a byproduct of mining other metals, most notably copper, which itself faces a supply crisis.
According to Reuters, delegates at the LBMA's annual conference in Sorrento forecast silver at $97 within 12 months, alongside gold at $5,013. A persistent premium in China also hints at appetite for physical metal.
The Bear Case: Thrifting and Full Vaults
Deutsche Bank disagrees with the deficit thesis.
"Peak silver scarcity is clearly in the rear-view mirror," Daniel Ghali, the bank's head of metals research, wrote in a recent note.
Solar is the main culprit. Silver use per cell is set to fall 17% in 2026 as prices forced manufacturers to switch to thinner contacts and copper-coated pastes. Global solar demand is forecast to drop more than 20%, and Chinese demand by as much as 33%.
Meanwhile, London vaults held about 914 million ounces at the end of August. Freely available metal has grown around 70% since one year ago - to more than 300 million ounces.
For Ghali, these rising CME and Shanghai stocks reflect "more than a simple reshuffling of inventories across jurisdictions."
Thus, Deutsche sees a surplus as early as 2027, with prices averaging $70 by Q2 2027. If the Fed keeps rates higher for longer, silver-backed funds could release about 40 million ounces by December 2027. Indian imports running 25% below year-ago levels further weaken the demand thesis.
