Silver’s Two-Sided Coin: Record Mine Earnings Fail to Lift Spot as Trade Deal Fizzles and Fed Tightens

Silver's rally fades after US-China tariff truce collapses; industrial demand expected to drop 19% by 2026 as solar manufacturers cut silver use; hot CPI dashes Fed rate cut hopes.

On May 15, silver traded at $83.62 per ounce, a marginal 0.26 percent gain that belies the metal’s recent turbulence. Just days earlier, on May 11, a single session had sent the metal soaring six percent after Washington and Beijing announced a 90-day tariff ceasefire. That rally has since crumbled. The pattern is telling: silver’s industrial demand engine — responsible for roughly 60 percent of annual consumption in solar panels, EVs, semiconductors and electronics — powered the move, not safe?haven buying. Gold barely budged during the spike, confirming the market was pricing in an improvement in manufacturing supply chains, not geopolitical hedging.

The hoped?for trade breakthrough never materialised. President Trump left Beijing without concrete agreements. The only outcomes from his talks with Xi Jinping were a vague framework for a “constructive, strategically stable” relationship and an invitation to the White House in September. There was no deal on critical minerals, no formalisation of the tariff truce. That leaves the industrial demand outlook in limbo. Solar manufacturers, the largest consumers of silver, had been banking on clarity to lock in long?term procurement plans. Instead, they face continued uncertainty, which is already feeding into a structural shift: photovoltaic producers are accelerating efforts to reduce the silver content per panel, with PV?related demand expected to drop nearly 19 percent in 2026. According to the World Silver Survey 2026, total industrial demand slipped from a record 679 million ounces in 2025 to 657 million ounces last year, as high prices spurred substitution.

Monetary headwinds are compounding the industrial drag. April’s CPI printed at 3.8 percent — the hottest reading since May 2023 — prompting a collapse in expectations for a June rate cut from the Federal Reserve. According to the CME FedWatch tool, the probability of a cut in June plunged from around 48 percent to below eight percent. September is now the earliest realistic window, with November and December carrying significant weight. A stronger dollar is pressuring all dollar?denominated commodities. Japan added to global inflation jitters this week as wholesale prices rose 4.9 percent in April, their fastest pace since May 2023, reinforcing the message that central banks will remain cautious.

HSBC has raised its silver price forecasts in response to ongoing supply tightness, but the bank’s outlook is far from bullish. It now expects an average of $75 an ounce in 2026 and $68 in 2027, up from prior estimates of $68.25 and $57 respectively. Yet the bank also projects industrial demand will fall further to 642 million ounces in 2026. The global supply deficit is narrowing sharply: HSBC models show it shrinking from 143 million ounces in 2025 to 73 million ounces in 2026 and to just 25 million ounces in 2027. The Silver Institute is forecasting a sixth consecutive deficit year in 2026, which remains structurally supportive but does little to counter the immediate downward pull from weaker consumption.

While the spot market languishes, the miner segment is delivering a markedly different story. Aya Gold & Silver posted first?quarter revenue of $117 million, a 244 percent year?on?year surge, and net profit of $49 million. Silver production reached roughly 1.5 million ounces, up 49 percent. The only blemish was adjusted earnings per share of C$0.33, which missed analysts’ expectations of C$0.43 — a reminder that operational strength does not always translate to stock market gains. Aya maintains its full?year guidance of 6.2 to 6.8 million ounces and continues an ambitious exploration program.

Avino Silver & Gold Mines also delivered record numbers: revenue of $39.4 million, up 109 percent, net profit of $15.9 million, and silver production of 263,057 ounces. The company holds a cash position of $139 million, giving it plenty of flexibility even as the spot price faces headwinds. First Majestic Silver is planning to restart operations at its Jerritt Canyon mine next year, though its shares fell 5.5 percent on the day to $22.66, leaving the stock trading at a price?to?earnings ratio of 38.4, which many analysts consider moderate by historical standards.

Merger and acquisition activity in the mining sector remains brisk. In the first quarter of 2026, deal volume reached $21.6 billion, driven by demand for critical minerals and the pressure on large producers to consolidate portfolios. The pace underscores confidence in the long?term thesis for silver, even as short?term macro and trade drags weigh.

Elsewhere in the metals complex, gold held steady at $4,687.36 an ounce, down just 0.02 percent, while copper slipped 0.89 percent to $13,950.81. Platinum and palladium each lost more than three percent, reflecting the broader industrial malaise. Silver, perched between miner optimism and consumer caution, remains caught in a narrowing vise: supply deficits tighten underneath, while above?ground demand falters under the weight of stalled trade talks, stubborn inflation, and a hawkish Fed. The gold?silver ratio, which compressed rapidly from above 80:1 to below 55:1 during the ceasefire rally, is expected to widen again in the near term as uncertainty persists.