Does silver demand exceed supply? Are countries and private individuals hoarding silver and the is the impact on supply and future price ?
Executive summary
Global reporting from industry groups, banks and market commentators indicates that since 2021 silver has been running persistent structural deficits—annual demand has exceeded mine production and recycling in multiple recent years—driving inventory drawdowns and a sharp price rally into 2025–early 2026 [1] [2] [3]. The shortage is driven by rising industrial use (notably photovoltaics and electrification), tighter Chinese policy and strong investment flows into physical vehicles (ETFs, coins, private buying), and those forces together have materially tightened available above‑ground metal and lifted lease rates and spot premia [4] [5] [6].
1. Does demand exceed supply today? The data say yes
Multiple independent summaries and industry surveys describe a multi‑year structural deficit: global demand in recent reporting stretched to roughly 1.2 billion ounces versus mine+recycling supply closer to ~1.03–1.07 billion ounces, creating deficits in the order of 100–300 million ounces in 2024–2025 depending on the methodology used [1] [4] [2]. Visualizations and market analysis frame the market as in persistent deficit since 2021, with inventories and LBMA/COMEX eligible stocks shrinking and price action reflecting that tightening [2] [7] [6].
2. Who is hoarding—and what is “hoarding”? national stockpiles, funds and private buying
Reports point to three distinct accumulation pools: sovereign and industrial stockpiles (countries with large reserves and import behavior like China/India), large financial custodians/ETFs accumulating physical metal, and private retail/collector demand that drained mint sales and exchange inventories; commentators also highlight aggressive accumulation by major banks through vaults and funds as significant [8] [7] [9]. China’s export controls and reported strategic classification of silver have effectively reduced available global flows, while ETF inflows and retail coin/mint demand are noted as directly drawing down London/COMEX stocks [3] [10] [6]. Some analysts allege very large one‑off accumulations by banks (reporting on JP Morgan activity), but that reporting ranges from mainstream coverage to more speculative sources and must be read as contested [9] [11].
3. Why demand has outpaced supply: industrial re‑rating and policy shocks
Industrial demand—solar PV manufacturing, EV and electronics—now accounts for a much larger share of silver consumption (solar alone consuming a growing double‑digit percentage and PV demand projected to rise through the decade), and new cell technologies use more silver per GW installed, increasing the metal’s structural industrial load [5] [4]. Supply responsiveness is weak because most silver is a by‑product of other mines (copper, lead, zinc), so silver output is tied to those economics and cannot be quickly scaled [12] [13]. Overlaying that structural trend are policy steps—China’s refined‑silver export restrictions—that reduce effective tradable supply and exacerbate local hoarding or strategic retention [3] [6].
4. Price and supply implications in the near to medium term
With inventories drawn down, lease rates elevated and persistent ETF and industrial offtake, many forecasters posit higher base prices or at least elevated volatility into 2026, with a range of scenarios from consolidation in the $50–80 area to upside runs above $100 if deficits persist or deliveries tighten further [14] [4] [1]. The immediate mechanical impact is tighter physical availability (higher spot premia, delivery frictions) rather than an instantaneous increase in mine output—new mine projects and by‑product growth take years—so the supply response is slow and price acts as the short‑term balancing variable [15] [12] [4].
5. Risks, alternative readings and market‑structure caveats
Not all commentators agree on magnitude or permanence: some estimates of the deficit vary widely (some put 2025 shortfalls 160–230 Moz, others cite lower figures), and a portion of the move is driven by investment psychology and speculative positioning which could reverse if prices trigger demand destruction or substitution [1] [16] [14]. Historic episodes—most famously the 1980 Hunt affair—show attempts to corner or hoard silver can reverse violently, and questions about concentrated positions, paper‑to‑physical dynamics, and potential market interventions remain part of the debate [17] [13] [18]. Reporting on very large secret hoards (banks or governments) mixes verified custody data with conjecture; such claims require granular verification of vault holdings and custodial records before being accepted as definitive [9] [8].
6. Bottom line: structural squeeze, hoarding elements present, price upside plausible but uncertain
Available industry reports and market commentary converge on a clear short‑to‑medium‑term supply squeeze: structural industrial demand growth plus policy‑driven flow restrictions and strong investment accumulation have reduced above‑ground availability and pushed prices sharply higher, and unless recycling or major new supply projects accelerate materially, prices are likelier to remain elevated and volatile rather than collapse to prior lows [1] [3] [4]. However, precise future pricing depends on several variable outcomes—demand destruction/substitution, timing of new mine output, recycling growth, and whether concentrated holders release metal—so upside is plausible but not inevitable, and some claims of secret mega‑hoards remain contested in the sources [14] [9] [18].