Silver’s $75.74 Balancing Act: Investors Rush In as Solar Sector Pulls Back

Silver climbs to $75.74 as solar thrifting cuts PV demand 19% by 2026, while investment demand jumps 20%, driving a sixth consecutive supply deficit.

The silver market is staging a remarkable rebalancing act. On Monday, the white metal climbed more than two percent to $75.74 per ounce, but the forces driving that move are far from straightforward. Rather than a simple demand surge, the market is witnessing a fundamental structural shift that is reshuffling the entire supply-demand equation.

Solar’s Thrifting Revolution Accelerates

For years, the energy transition provided a dependable growth narrative for silver. That story is now fraying at the edges. Photovoltaic demand has already dropped six percent in 2025 to 186.6 million ounces, and projections for 2026 point to a further 19 percent decline, bringing the figure to roughly 151 million ounces.

The culprit is the very success of silver’s price rally. With prices hovering near $80 an ounce, silver now accounts for an estimated 17 to 29 percent of PV module costs per watt — a dramatic leap from just three percent in 2023. Module manufacturers have responded by accelerating their so-called thrifting strategies. Chinese giant Longi Green Energy Technology is planning to replace silver with copper in back-contact cells, with mass production slated to begin in the second quarter of 2026.

The knock-on effect has been stark: total industrial silver offtake fell three percent in 2025 to 657.4 million ounces, marking the first contraction since the pandemic.

Investment Demand Fills the Void

What the solar industry is shedding, investors are eagerly scooping up. The Silver Institute projects that physical investment demand will jump 20 percent in 2026 to 227 million ounces — a three-year high. Supply, meanwhile, is barely keeping pace, growing at just 1.5 percent to 1.05 billion ounces.

Metals Focus managing director Philip Newman highlighted ETF inflows of 187 million ounces as a key driver. He pointed to investor concerns over stagflation, the independence of the US Federal Reserve, and the sustainability of sovereign debt levels. “Silver’s exceptional price performance and favorable supply-demand environment have further bolstered investor confidence,” Newman said.

A Sixth Consecutive Deficit Looms

The structural backdrop remains decidedly tight. The silver sector posted its fifth straight supply deficit in 2025, coming in at 40.3 million ounces. According to the latest World Silver Survey, the estimated shortfall for the current year stands at 46.3 million fine ounces. Since 2021, cumulative above-ground inventories have been drawn down by a staggering 762 million ounces.

Mine production has edged higher, and recycling hit a 13-year high of 197.6 million ounces, but these gains have not been enough to close the gap. The market is living off its stockpiles.

Macro Headwinds Cap the Upside

Despite the bullish fundamentals, silver’s price has been consolidating after hitting a record high above $121 in January. A strong US dollar is making the greenback-denominated metal more expensive for buyers outside the dollar zone. Sticky US inflation has fueled expectations that the Federal Reserve will keep interest rates elevated for longer, dampening the appeal of non-yielding assets.

Geopolitical tensions in the Middle East present a double-edged sword. They bolster silver’s safe-haven status on one hand, but push global energy prices higher on the other.

Beyond Solar: Other Industrial Pillars Hold Firm

The solar slowdown is not the whole story. Data centers, AI infrastructure, and the automotive sector continue to support industrial demand. J.P. Morgan Global Research expects silver to average $81 per ounce in 2026 — more than double the prior year’s average.

Whether investment demand can permanently offset the solar sector’s retreat will become clearer once Chinese copper-cell production ramps up at scale. For now, the market remains caught between two powerful forces: a structural deficit that should support prices, and macro headwinds that keep a lid on them. The tug-of-war is far from over.