Deutsche Bank says rising inventories and falling industrial demand could push the silver market into surplus as soon as next year. It still sees prices averaging $70 an ounce by the second quarter of 2027, above today's level but below the peaks of early 2026.
At a glance
- More than 914 million ounces of silver sat in London vaults at the end of August, over 300 million of it freely available.
- Deutsche expects silver use in solar to fall more than 20% this year, with Chinese solar demand down 33%.
- Silver use per solar cell is set to drop 17% in 2026 as manufacturers cut back.
Background
Silver has been in a supply shortfall for several years, with demand outrunning mine output and recycling. A big part of that demand comes from solar panels, which use silver paste to conduct electricity. Thrifting means using less of a metal per product, through better design or cheaper substitutes. London's vaults are the main global stockpile that traders draw on when supply is tight.
What happened
Rising silver inventories and declining industrial demand could create a glut as soon as next year, Deutsche Bank said in a report on Friday. "Peak silver scarcity is clearly in the rear-view mirror," wrote Daniel Ghali, the bank's head of metals research.
It marks a sharp turn from last October, when tight supplies in London drove borrowing costs to extreme levels. Silver briefly topped $120 an ounce at the start of 2026 and traded at $60.99 on Monday, down about 14% this year but 26% higher than a year ago.
Why the shortage is easing
Stocks have rebuilt. Freely available silver in London has risen 70% since October 2025, and inventories have also grown in CME warehouses in the US and in Shanghai. Ghali linked the increase to recycling, private vault holdings and weaker demand. JP Morgan analysts have also said physical tightness is unwinding, but Deutsche goes further by forecasting a surplus.
Solar is the main source of lost demand. High prices pushed silver above 30% of solar module costs earlier this year, from under 10% at the start of 2025, so manufacturers cut back with thinner contacts and copper-coated silver pastes. That share has since fallen to about 14%.
What it means
With scarcity fading, Deutsche says investment demand will matter more than industrial use for prices. Its $70 forecast for the second quarter of 2027 is above today's price, but silver may struggle to keep pace with gold.
Investors could still shift the picture. Deutsche estimates silver-backed funds could release about 40 million ounces by December 2027 if patterns from past Fed rate-hike cycles repeat.
Our read
Outlook: neutral. A move toward surplus removes silver's scarcity premium. Deutsche's own $70 forecast for mid-2027 is still above today's price, so the outlook is mixed rather than outright bearish.
What to watch
- London vault inventory data for further rebuilding of freely available silver.
- Silver-backed fund flows as the Fed weighs more rate hikes.
- Solar manufacturers' silver use per cell as thrifting continues.
For information only, not investment advice.
Silver price in India
metalscost.com India reference price as of 2026-10-16.
Detailed analysis
Timeline
- 2026-10-02: Deutsche Bank publishes its report forecasting a possible silver surplus in 2027.
Demand Drivers
Silver use in solar is set to fall more than 20% this year as manufacturers thrift.
Inventory Drivers
Freely available silver in London has risen 70% since October 2025.
Interest Rates
Fed rate hikes could prompt silver-backed funds to release about 40 million ounces.
What could lift prices
- Deutsche's $70 forecast for mid-2027 is above today's price of about $61.
- Silver is still 26% higher than a year ago, showing underlying investor interest.
What could weigh on prices
- Rising inventories across London, the US and Shanghai remove the scarcity premium.
- Solar thrifting is cutting the biggest source of industrial silver demand.
Country impact
| Country | Impact | Reason |
|---|---|---|
| China | High | Chinese solar demand for silver is expected to fall 33% this year. |
| United Kingdom | Medium | London's vaults hold more than 914 million ounces of silver. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Solar Photovoltaic Manufacturing | Positive | Using less silver per cell is lowering module costs. |
| Silver Mining | Negative | A shift to surplus would weaken support for silver prices. |
Who gains, who loses
- Solar panel makers: Silver's share of module costs has fallen from over 30% to about 14%.
- Silver miners: A surplus would remove the scarcity that drove prices above $120.
Other ways this could play out
- If investment demand stays strong, silver could reach Deutsche's $70 forecast despite a surplus.
- If silver-backed funds release metal during Fed hikes, prices could fall further.
Price risks
- A new physical squeeze in London would revive the scarcity premium.
- Faster-than-expected thrifting in solar would deepen the surplus.
Historical comparison
- October 2025: Tight supplies in London drove silver borrowing costs to extreme levels.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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United Kingdom