UBS Maps Silver's Path to $80 as Solar Substitution Reshapes Demand

UBS forecasts silver at $70 by December 2026 and $80 by September 2027, while a 19% solar demand drop and copper substitution weigh on prices.

Silver traders have two competing narratives to weigh this week: a Swiss bank's bullish roadmap stretching into late 2027, and a quiet technological shift in solar manufacturing that keeps chipping away at industrial offtake.

UBS strategist Dominic Schnider expects the metal to reach $70 per troy ounce by December 2026, then $75 in both March and June 2027, before touching $80 in September 2027. COMEX front-month contracts finished last Friday at $66.78 an ounce.

Monday's session offered modest encouragement. December-delivery contracts opened at $66.68 an ounce before climbing as high as $67.07 intraday, while spot silver held near the prior day's level at $66.22. The steadiness comes as markets await the UN General Assembly and a planned summit between Washington and Beijing.

The advance offers some relief after a stretch of elevated volatility. Friday's COMEX close of $66.78 followed a pronounced consolidation from the 52-week peak of $121.78 touched at the end of January. Year-to-date, the futures market shows a decline of 5.4%.

Gold Correlation Near Multi-Year High

Schnider's core thesis rests on silver's tight linkage to gold. The correlation between the two metals is hovering near a multi-year high, effectively making silver behave like a more volatile proxy for gold. Investor demand has provided additional support. UBS sees little room for the gold-silver ratio to exceed 70, and advises clients to use periodic weakness as an opportunity to build positions gradually.

The front-month contract currently trades 3.8% above its 50-day moving average of $64.34.

Solar's Silver Diet

On the physical side, the picture is more complicated. The Silver Institute projects a roughly 19% drop in silver demand from the solar industry for full-year 2026, driven by ongoing reductions in the amount of metal used per photovoltaic module.

That trend is now visible on factory floors. LONGi began mass production of copper-based back-contact cells in the second quarter, and competitors Jinko and Aiko are pushing similar silver-substitution technologies forward. Even with the Silver Institute still forecasting a calculated supply deficit of about 46 million ounces for 2026, the accelerating material shift in industrial production places a clear ceiling on longer-term price momentum.

Data Centers and Grids Pick Up the Slack

UBS argues that growing demand from key future technologies offsets the solar drag. Data center construction, artificial intelligence investment, power grid expansion, and electric vehicle manufacturing are all filling the gap left by solar's thrift.

Supply remains structurally tight regardless. Silver is mined worldwide predominantly as a byproduct of lead, zinc, copper, and gold extraction, which makes rapid increases in output difficult to achieve.

COMEX warehouse data underscores the physical backdrop. Registered stock — metal available for delivery — stood at 99.4 million ounces, with another 238.7 million ounces classified as eligible. These inventories form the foundational backbone for settling contracts in New York.

Policy and Macro Risks

Monetary policy could cap gains temporarily. A persistently restrictive rate path might limit upside potential, according to UBS. The bank also flags a marked deterioration in global economic growth or an unexpectedly sharp drop in industrial demand as further downside risks.

For now, traders appear content to hold steady, balancing geopolitical anticipation against a demand landscape being quietly rewritten by copper.