The global silver market is heading into its sixth consecutive year of supply deficit, but the nature of the shortage has changed. While high prices push solar manufacturers and jewelry fabricators to cut silver use, a surge in retail investment in coins, bars, and ETFs is absorbing the slack. For jewelry buyers, this means volatile prices, thinner liquidity, and potential sourcing challenges ahead.
Supply-chain impact
The Silver Institute's World Silver Survey, produced with Metals Focus, projects a 46.3 million ounce (Moz) shortfall in 2026, widening from 40.3 Moz in 2025. Above-ground inventories are shrinking, and lease rates are becoming more volatile. For jewelry and silverware manufacturers, this tightness translates into unpredictable raw material costs and potential delays in metal availability, especially during price spikes.
Demand divergence: industry retreat vs. investor surge
Global silver demand fell 2% to 1,130.6 Moz in 2025, with industrial consumption dropping 3% to 657.4 Moz. The photovoltaic sector led the decline as solar panel makers accelerated silver thrifting and substitution. Jewelry fabrication fell 8% in 2025 and is projected to plunge 16% in 2026 to a five-year low of 159.4 Moz. Silverware demand is expected to drop 20% in 2026. Meanwhile, physical investment in coins and bars rose 14% in 2025, with India seeing a 33% jump, and ETPs recorded net inflows of 68.3 Moz.
Price volatility and liquidity squeeze
Silver averaged over US$40/oz in 2025, a 42% year-on-year increase, but the annual average masks extreme swings. After hitting an all-time high above US$121/oz on January 29, 2026, prices crashed 38% in a single day following a hawkish US Federal Reserve signal. By late March, silver settled in the high-US$60s. The October 2025 liquidity squeeze, as investors pulled metal into CME vaults and ETPs, fractured the physical supply chain for refiners and manufacturers.
What buyers should watch
Jewelry buyers sourcing silver should monitor the gold-to-silver ratio, which swung from 107:1 in April 2025 to below 55:1 by December. The ratio's volatility signals rapid shifts in investor sentiment that directly impact silver pricing. Additionally, refinery bottlenecks remain a structural constraint on recycling volumes, which are expected to rise 7% in 2026. This means scrap metal may not quickly alleviate supply tightness.
China sourcing context
While the report does not specifically address China, the country is the world's largest silver fabricator and a key supplier of silver jewelry and components. The PV sector's deliberate retreat from silver use in China could free up some metal for other industrial applications, but the overall deficit and investor-driven price swings may still affect raw material costs for Chinese OEM/ODM suppliers. Buyers should factor in potential premium fluctuations on physical bars and coins when negotiating contracts.
Source: Read the original report | Published: April 21, 2026