Following recent significant volatility, the silver market has entered a consolidation phase around the high level of $80 per ounce. Analysis suggests that while the current trading price has retreated from last month's historical peak, the fundamental framework supporting a long-term bull market for silver remains intact. Driven by both macroeconomic premiums and its physical attributes, this high-level consolidation is viewed more as a period of accumulating momentum for the next trending move rather than signaling an end to the upward trajectory.
From a core supply and demand perspective, silver is confronting unprecedented structural challenges. The global silver market is projected to face a supply deficit of approximately 67 million ounces in 2026, marking the sixth consecutive year of shortfall. Although global total supply is expected to increase by 1.5% this year, reaching a ten-year high of 1.05 billion ounces, it will still be insufficient to fully cover the growing combined investment and industrial demand. The tight physical supply conditions in the London market, coupled with investor skepticism regarding the independence of the Federal Reserve's policy, are identified as underlying factors contributing to the 11% price increase forecast for silver in 2026.
On the demand side, the resurgence of investment sentiment is becoming a focal point for the market. Holdings in global Exchange-Traded Products (ETP) have reached about 1.31 billion ounces, with physical investment demand anticipated to surge by 20% year-on-year, hitting its highest level in three years. Although silver usage in the traditional photovoltaic industry has seen a slight decline due to substitution effects, new industrial growth drivers are emerging. These are fueled by the artificial intelligence boom driving demand for underlying hardware, data center expansion, and the wave of automotive electrification, effectively counterbalancing weakness in traditional sectors.
Jewelry and consumer demand are exhibiting some price sensitivity in the high-price environment, but this has not altered the overall tight supply-demand balance. While jewelry demand is expected to fall to its lowest level since 2020, this type of cost-driven demand contraction is typical during the mid-phase of a bull market. As silver's role continually shifts between that of a monetary asset and an industrial metal, its strategic position in global asset allocation is gaining increased recognition from institutional investors.
Looking ahead, the long-term value proposition for silver remains rooted in a supply gap that cannot be quickly filled through capacity expansion. Amid intertwined macroeconomic uncertainties and geopolitical fluctuations, silver, as a hedge asset with high elasticity, is expected to see its consolidation zone around $80 per ounce serve as a key support level for observing bullish momentum. Investors are advised to pay close attention to the comprehensive survey report scheduled for release in April, which will provide the latest benchmark data on global resource extraction costs and recycled supply volumes.