Why the Silver price case now rests on investors

The firm behind the world's silver survey now expects more silver than buyers need in 2027, yet it still expects silver to average a higher price next year than this year.

The reason is investors. Metals Focus compiles the World Silver Survey for the Silver Institute. Its price case rests on buying by funds that hold physical silver, not on a shortage. On that basis, it still sees a higher average price in 2027. The surplus itself is bad news for silver's supply and demand balance in 2027. It comes from solar: the silver saved by making each panel more efficiently now outweighs the growth in solar installations. The firm also expects silver to keep lagging gold in the months ahead. The interim review by Metals Focus and the Silver Institute, expected in mid-November, will show whether any of this becomes the official forecast.

Silver jumped on Wednesday. USAGOLD's report that day put silver at $52.49 an ounce, up 4.58% on the day, as the dollar weakened after the US midterm elections. Gold was at $4,053.68, which puts the gold-silver ratio at 77.2. That ratio is the number of ounces of silver one ounce of gold buys. Last Friday, silver had dipped below $50. At Golden Meadow®, I read the survey and the firms behind it closely, because their numbers set the terms of the long-term case for silver.

What the Survey's compiler said

A shortfall means buyers want more silver in a year than mines, recycling and other sources supply. A surplus means the opposite. Metals Focus and the Silver Institute forecast a shortfall of 46.3 million ounces for 2026. That figure, from the survey they published in April, would be the sixth shortfall in a row.

In October, Metals Focus gave a new set of figures in an interview. Its Director of Gold and Silver, Matthew Piggott, put this year's shortfall at a smaller 35.4 million ounces. For 2027 he forecast what one report of the interview called a theoretical surplus of 37.3 million ounces. Earlier in October, Deutsche Bank and the bullion dealer StoneX had also talked of a surplus, without giving a tonnage.

The main cause is solar. Piggott said efficiency gains in panel manufacturing now outpace the growth in solar capacity. In plain terms, each new panel carries less silver than the last, a process the industry calls thrifting. He expects industrial demand to fall to 618.2 million ounces next year. The same report of the interview said growing demand from data centres and electric vehicles cannot fully make up the difference. A few days before the interview, BloombergNEF had cut its forecast for solar installations this year to 584 gigawatts. That would be 10.8% below 2025.

What it does not change yet

This was an interview, not a published revision. The Silver Catalyst newsletter keeps the survey's 46.3 million ounce shortfall as its figure until Metals Focus and the Silver Institute publish a change. If past years are a guide, the next published update will come in the interim review in mid-November.

The interview also left gaps. It gave no figures for mine supply, recycling or total demand, so the 2027 surplus cannot be checked line by line against the survey. Its 2026 industrial figure barely differs from the survey's. Almost all of the smaller shortfall therefore comes from lines the interview did not spell out. The table sets the two sources side by side.

Sources: World Silver Survey 2026, Metals Focus and the Silver Institute | Kitco News, Metals Focus interview, October 19 | SMM reprint of GOLDINVEST interview, October 23 | pv magazine, BloombergNEF forecast, October 15

The interview gave no figures for supply, recycling, total demand or photovoltaic demand, so the 2027 surplus cannot be checked line by line against the survey. The 72.7 Moz swing is our own subtraction.

Where the price case now rests

Metals Focus remains bullish on price. In the interview, it forecast an average silver price of $72.60 this year. For 2027, its forecast is $84.40. These are the firm's forecasts, not mine, and they rest on investors rather than on a shortfall.

One report of the interview described his view this way: only large inflows into funds that hold physical silver can soak up the metal now available to buy. The same report said he considers a repeat of the speculative squeeze above $120 unlikely. That refers to the run to a record price in January.

For scale, at Wednesday's price, buying the whole 37.3 million ounce surplus would cost roughly $2 billion. That assumes every ounce funds buy is an ounce taken off the market.

Technology is the part of industrial demand still growing. Metals Focus and the Silver Institute expect silver use in data centres alone to exceed 10% of electrical and electronics demand next year. So far, though, it has not outweighed what solar is losing: in 2025, the survey says, savings in solar panels outweighed the gains from AI and data centres.

The near term looks harder. In a report covered by Kitco on October 29, Metals Focus said it expects silver to keep doing worse than gold for now. Over the next 12 months, it expects silver to take its lead from gold. It named higher interest rates and bond yields as a near-term risk. It also said it does not expect that underperformance to last indefinitely. Holdings in silver-backed funds have fallen by about 60 million ounces this year, the firm said. On that measure, the buying its price case needs has not yet arrived.

What this means to Silver investors

The firm behind the survey has turned more cautious on the balance between silver supply and demand. Over the next year, that is bad news. It expects a smaller shortfall this year, a surplus in 2027, and silver lagging gold in the meantime.

The firm has not turned bearish on the longer-run price, though. Its own forecast puts the 2027 average above this year's, on the view that investors, rather than a shortage, will do the work. That makes fund buying the signal to watch. A sustained return of money into funds that hold physical silver is what Metals Focus says the price case needs.

The published numbers have not changed yet. Metals Focus and the Silver Institute still show a 46.3 million ounce shortfall for 2026, and the interim review in mid-November will show whether that moves.