The silver market has posted a supply deficit every year since 2021. Through 2025, five years of deficits drained a cumulative 762 million ounces (Moz) from above-ground stocks. The 2026 forecast adds another 46.3 Moz, making it the sixth consecutive year of undersupply. London vault inventories are down 20% from their 2021 peak, and spot silver prices have roughly tripled since 2023.
Six Years of Deficits, Year by Year
Before 2021, the silver market ran modest surpluses for five straight years. The shift that followed was abrupt.
Year
Balance (Moz)
Notes
2016
+65
Surplus
2017
+54
Surplus
2018
+15
Surplus
2019
+11
Surplus
2020
+45
Surplus (COVID supply disruptions offset by demand drop)
2021
-89
First deficit after 5 surplus years
2022
-272
Largest deficit on record
2023
-210
Second-largest on record
2024
-151
Deficit narrows but still deep
2025
-40.3
Actual
2026
-46.3
Forecast (Silver Institute/Metals Focus)
The 2022 deficit of 272 Moz remains the largest ever recorded. To put that in perspective, that single year’s shortfall was more than four times the size of the surpluses the market ran in 2018 and 2019 combined. While the deficit narrowed significantly through 2024 and 2025, the market never returned to surplus. The 2026 forecast calls for another 46.3 Moz shortfall, making it the sixth consecutive year of undersupply.
Added together, 762.1 Moz of silver has been drawn from existing inventories, scrap, and above-ground stocks since 2021. That is more than the current contents of all LBMA London vaults.
Supply: Why Mine Production Cannot Close the Gap
Global mine production hit 846.6 Moz in 2025, a 3% increase that brought output to a decade high. The 2026 forecast is essentially flat at 844.1 Moz. That sounds like a lot of silver until you consider two things: total demand consistently runs above 1,000 Moz per year, and mine production peaked at roughly 900 Moz back in 2016. A decade later, the industry still has not matched that level.
The structural problem is that silver is mostly a byproduct. Only 28% of mined silver comes from primary silver mines. The other 72% is produced as a side effect of mining gold, copper, lead, and zinc. This means silver supply is largely determined by investment decisions in other metals. When copper miners expand production, silver supply rises. When they pull back, silver supply drops, regardless of what the silver price is doing.
Ore grades have been declining for decades. In the 1990s, primary silver mines commonly processed ore grading 150 to 200 grams per tonne. Today, grades of 80 to 120 g/t are more typical. Lower grades mean more rock must be moved and processed to extract the same amount of metal. Costs go up. Production per mine goes down.
Among the top producing countries, Mexico remains number one at 172.9 Moz in 2025, but that figure fell 5% and has declined for three years running. Peru posted 130.6 Moz, up 7%, while China contributed 112.8 Moz. No single country is ramping production fast enough to change the global picture.
Even if a major new silver deposit were discovered tomorrow, the timeline from discovery to first production is typically 10 to 15 years. Permitting, feasibility studies, mine construction, and environmental review all take time. There is no quick supply fix available.
The USGS estimates global silver reserves at approximately 610,000 metric tonnes. At current production rates, that implies a reserve life of about 23 years. That number will shift as new deposits are found and old ones deplete, but it underscores that silver is a finite resource with production constraints that are real and persistent.
Recycling Helps, but Not Enough
Silver recycling reached 197.6 Moz in 2025, a 12-year high. The 2026 forecast projects 211.3 Moz, a 7% increase. Higher silver prices incentivize more scrap recovery, particularly from electronics, old photographic materials, and industrial waste streams. But even at 211 Moz, recycling covers only about 20% of total demand. It helps close the gap. It does not close it.
Demand: Industrial Use, Solar, EVs, and AI
Silver is not just a precious metal that people buy as coins and bars. It is an industrial metal whose electrical and thermal conductivity make it difficult to substitute in many applications.
Industrial fabrication demand hit a record 680 Moz in 2024, accounting for roughly 60% of all silver demand. That figure pulled back slightly to 657.4 Moz in 2025, a 3% decline. But even at the lower 2025 level, industrial use alone consumes more silver than all the world’s primary silver mines produce.
Solar Panels: Still Huge, but Thrifting
Solar photovoltaic manufacturing consumed 232 Moz of silver in 2024. That made solar the single largest industrial end-use category. In 2025, consumption dropped to 186.6 Moz, and the 2026 forecast points to roughly 151 Moz.
The decline is not because fewer solar panels are being installed. Global solar capacity additions continue to grow. The decline is because panel manufacturers have gotten better at thrifting, reducing the amount of silver paste used per cell. Newer cell architectures use thinner silver lines and less material per watt of capacity. This is a real headwind for silver demand from solar, even as installations scale.
That said, 151 Moz is still a massive number. Solar alone consumes more silver than the entire jewelry industry.
Electric Vehicles
Each electric vehicle uses between 25 and 50 grams of silver, roughly 67% to 79% more than a comparable internal combustion engine vehicle. The silver goes into electrical contacts, battery management systems, charging infrastructure, and onboard electronics. With EV adoption continuing to grow globally, automotive silver demand is estimated at 70 to 75 Moz in 2026. That number will keep rising as long as the EV transition continues.
AI and Data Centers
The newest demand driver is the build-out of AI infrastructure. Hyperscaler capital expenditure, the spending by companies like Microsoft, Google, Amazon, and Meta on data centers, is projected to exceed $725 billion in 2026. Data centers use silver in electrical connections, thermal interface materials, and high-reliability solder joints. Estimated additional silver demand from this sector is 15 to 20 Moz in 2026. That is still small relative to solar or investment demand, but it is growing fast and was essentially zero five years ago.
Physical Investment Demand
Coins and bars are holding strong. Physical investment demand is forecast at 227 Moz for 2026, up 20% and a three-year high. If you are looking to add silver to your holdings, our silver bars guide covers sizing, purity, and what to look for. We also track the lowest premiums on silver across dealers in real time, and our coverage of Silver Eagle premiums shows how those spreads have moved over time.
Inventories: The Buffer Is Shrinking
The LBMA vaults in London, the largest identified silver stockpile, held 27,454 tonnes (approximately 883 Moz) as of recent reporting, down 20% from the January 2021 peak.
COMEX registered inventory (silver available for delivery against futures contracts) stands at 99.8 Moz, recovered from a low of roughly 30 Moz in summer 2023 but still well below pre-2020 levels.
In October 2025, London experienced what participants called an unprecedented liquidity squeeze in physical silver. Even with hundreds of millions of ounces in vaults, the available-for-delivery portion can tighten rapidly when multiple large buyers move at once.
Price Response
Silver broke $100 per ounce for the first time on January 23, 2026, and peaked at $121.62 on January 29. As of mid-August 2026, the trading range has settled considerably lower, in the $67 to $73 range. That pullback from the highs is significant, but the broader context matters. Silver averaged roughly $25 per ounce through most of 2023. Even at current levels, prices are roughly triple where they were three years ago.
For buyers of physical silver, the relationship between spot price and the actual cost of coins or bars always includes premiums. You can track the current silver spot price and compare real dealer prices on our site. If you are weighing whether silver makes sense for your portfolio, our write-up on whether silver is a good investment breaks down the bull and bear cases with actual data.
What the Drawdown Means
The world is not about to run out of silver. There are still hundreds of millions of ounces in vaults, and recycling is scaling up. But the trend is clear: supply has not kept up with demand for six years running, and the demand drivers (industrial electrification, solar, EVs, AI, physical investment) are not going away.
On the supply side, mine production is constrained by byproduct economics, declining ore grades, and decade-long development timelines. When demand persistently exceeds supply, prices rise until either demand is destroyed or new supply is incentivized. The January 2026 spike to $121 may have been driven partly by speculative momentum, but the underlying deficit is real and measurable.
Key Takeaways
None of this tells you what silver will do next week. Short-term price movements depend on currency shifts, interest rate expectations, and speculative positioning as much as supply-demand fundamentals. But for anyone trying to understand the structural picture, six consecutive deficit years and a 762 Moz drawdown are hard to ignore.
You can explore more of our silver market analysis and buying guides on the FindBullionPrices blog. If you are new to silver investing, our junk silver guide covers one of the most affordable entry points into physical silver ownership.
Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or tax advice. Silver prices are volatile and can decline as well as rise. Past performance is not indicative of future results. The data cited in this article is sourced from the Silver Institute, Metals Focus, LBMA, COMEX, and USGS public reports. Always conduct your own research and consult a qualified financial advisor before making investment decisions.
