Rising silver inventories and declining industrial demand could trigger a supply glut as soon as next year, Deutsche Bank says in a new report.
Spot prices for silver could average $70 per oz. by the second quarter of 2027, remaining below levels reached in the first half of 2026, Deutsche Bank metals analyst Daniel Ghali said in a report Friday. A drop in the metal’s scarcity could result in silver struggling to keep pace with gold even as both metals benefit from a stronger precious metals market, he added.
Silver was trading at $60.99 per oz. early Monday afternoon, Trading Economics data show. Spot prices for the metal have dropped about 14% since the start of 2026, though they’re about 26% higher than a year ago.
The outlook marks a reversal from last October’s physical shortage, when tight supplies of readily available metal in London drove borrowing costs to extreme levels. Concerns over availability, coupled with geopolitical tensions and “safe-haven” buying, briefly pushed silver above $120 per oz. at the start of 2026.
“Peak silver scarcity is clearly in the rear-view mirror,” Ghali, Deutsche’s head of metals research, wrote in his report.
While analysts at global firms such as JP Morgan have recently predicted physical tightness in the silver market was unwinding, Deutsche goes one step further by envisioning the emergence of a surplus.
Larger cushion
More than 914 million oz. of silver — including more than 300 million oz. freely available for purchase – sat in London’s commercial vaults at the end of August, Deutsche says. The freely available supply has increased 70% since October 2025 and now provides a much larger cushion against sudden shortages, Ghali wrote.
Inventories have also risen in Chicago Mercantile Exchange warehouses and in Shanghai, a trend that probably reflects “more than a simple reshuffling of inventories across jurisdictions,” Ghali says. He attributes the increase to recycling, private vault holdings and weaker demand.
“We argue metal availability is now ample and evidenced across jurisdictions,” Ghali wrote. “Combined inventories in London and CME warehouses should put to rest any concerns around metal scarcity. Ultimately, this ties into the significant deterioration in silver’s demand profile, primarily relating to thrifting trends, which now threaten to create a glut.”
Demand destruction
Solar manufacturing will probably be the main source of demand destruction, Deutsche says. It estimates global silver consumption in solar applications will drop by more than 20% this year, with Chinese demand declining 33%.
Manufacturers are cutting silver use through improved production methods, including thinner electrical contacts, copper-coated silver pastes and designs that require less metal. Silver consumption per solar cell will fall 17% in 2026, Deutsche estimates.
High silver prices have accelerated these changes. Silver accounted for more than 30% of solar-module manufacturing costs earlier this year, compared with less than 10% at the start of 2025. Although that share has since fallen to about 14%, silver remains a significant cost for cell manufacturers, encouraging further reductions in consumption.
Investment demand
With peak scarcity now a thing of the past, investment demand — rather than industrial consumption – will be increasingly important to the metal’s price outlook, Ghali says.
Investment flows could still alter the picture. Deutsche estimates silver-backed funds could release about 40 million oz. by December 2027 if patterns seen during previous U.S. Federal Reserve interest-rate increase cycles are repeated.
India’s silver imports have been running 25% below year-ago levels after higher import duties and restrictions curbed buying, Deutsche also says. While August data suggest demand is recovering, London and Shanghai inventories are sufficient to accommodate seasonal Indian purchases, according to Ghali.
A key uncertainty is China, where silver prices carry a persistent premium despite weaker wholesale demand and rising inventories. The source of this apparent strength remains unclear and could pose an upside risk to the supply outlook, Deutsche says.