Silver shortage could flip to surplus in 2027: Deutsche
A drop in the metal’s scarcity could result in silver struggling to keep pace with gold even as they benefit from a stronger precious metals market.
Deutsche Bank predicts a potential surplus of silver by 2027 due to rising inventories and declining industrial demand. Analyst Daniel Ghali estimates spot prices may average $70 per ounce by the second quarter of next year, staying below levels seen in the first half of 2026. Silver's scarcity decreasing could make it difficult for the metal to maintain its value against gold, even as both benefit from a stronger precious metals market.
Ghali notes that silver's price has dropped about 14% since the beginning of 2026, though it remains 26% higher than a year ago. This outlook marks a shift from last October's shortage, when tight supplies pushed borrowing costs to extreme levels. Concerns over availability, geopolitical tensions, and safe-haven buying briefly pushed silver above $120 per ounce at the start of 2026.
Deutsche Bank's metals research head, Ghali, states that peak silver scarcity is in the past. As of August, there are more than 914 million ounces of silver in London's commercial vaults, with a 70% increase in freely available supply since October 2025. Inventories have also risen in Chicago Mercantile Exchange warehouses and Shanghai due to factors like recycling, private vault holdings, and weaker demand.
Demand destruction is expected primarily from solar manufacturing, with Deutsche Bank estimating global silver consumption in solar applications to fall by more than 20% this year. Chinese demand will decline by 33% as manufacturers cut silver use through improved production methods like thinner electrical contacts and designs requiring less metal. Silver's share in solar module manufacturing costs has fallen from over 30% to about 14%.
Investment demand will become increasingly important to the metal's price outlook now that peak scarcity is a thing of the past, according to Ghali. Deutsche Bank estimates silver-backed funds could release about 40 million ounces by December 2027 if trends from previous U.S. Federal Reserve interest-rate increase cycles repeat.
India's silver imports have been running 25% below year-ago levels due to higher import duties and restrictions. While August data suggest demand is recovering, London and Shanghai inventories are sufficient to accommodate expected Indian purchases, according to Ghali. The source of China's persistent premium in silver prices, despite weaker wholesale demand and rising inventories, remains unclear and could pose an upside risk to the supply outlook, Deutsche Bank says.
Written by urgent.news from Mining.com's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
