Silver closed the week at $76.63 per ounce, shedding roughly 6.4 percent as conflicting signals from US-Iran diplomacy and a resurgent dollar weighed on sentiment. The White House confirmed that negotiators Witkoff and Kushner would travel to Pakistan; Iran’s foreign ministry spokesman Baghaei immediately countered that “no negotiations with the Americans are on the agenda.” Foreign Minister Araghchi did meet Pakistani officials on April 25, but no direct US-Iran talks took place. The resulting uncertainty, combined with a stronger greenback, pressured non-yielding assets like silver. Meanwhile, the ongoing closure of the Strait of Hormuz continues to push energy prices higher, fanning inflation fears and further dampening the metal’s appeal.
The short-term price weakness, however, masks a structural story that is far more complex. According to the Silver Institute’s World Silver Survey 2026, the market is heading into its sixth consecutive year of deficit. The projected shortfall for 2026 stands at 67 million ounces, though a separate estimate from the survey puts the figure at 46.3 million ounces — a 15 percent increase from the prior year. Since 2021, the market has drawn a cumulative 762 million ounces from above-ground inventories to plug annual gaps. Global production is expected to rise to 1.05 billion ounces, a decade high, but demand is growing faster than supply can keep pace.
On the Comex, the disconnect between paper and physical markets has reached extreme levels. Registered silver inventories now cover only about 13 percent of open interest, meaning the vast majority of futures contracts lack physical metal backing. In London, the unencumbered silver share in vaults had fallen to a historic low of 17 percent in September 2025, triggering a liquidity squeeze that sent lease rates to record highs the following month. That figure has since recovered to 28 percent, but Philip Newman of Metals Focus warns the rebound is fragile. A fresh wave of Indian physical buying or renewed ETF inflows could quickly recreate the conditions for another squeeze.
A structural shift is underway on the demand side. The photovoltaic industry, silver’s largest industrial consumer, is reducing its usage per module as manufacturers grapple with overcapacity and falling panel prices. Solar-related silver demand is expected to fall to roughly 194 million ounces this year, a decline of 7 percent, even as global solar installations grow by 15 percent. This decoupling of PV capacity from silver consumption is a new phenomenon. Offsetting that decline is physical investment demand, which is forecast to jump 20 percent to 227 million ounces — a three-year high. Western retail investors are returning, drawn by silver’s strong price performance and macroeconomic uncertainty.
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China’s silver imports in March 2026 were 173 percent above the seasonal ten-year average, driven by retail investors switching from gold to silver and by solar manufacturers front-running a policy deadline. Yet the global spot price is set on the Comex and the LBMA, not in Chinese import statistics. That explains why, despite robust fundamentals, silver has fallen roughly 15 percent from its January high to mid-April.
The gold-silver ratio currently sits around 59 to 61, below the long-term average of about 70. Silver has become significantly more expensive relative to gold, and cheap valuation arguments no longer hold. With annualized volatility near 47 percent, the metal remains a high-beta play on macro uncertainty.
All eyes now turn to the Federal Open Market Committee meeting on April 28–29. Geopolitical tensions and questions about the Fed’s independence continue to provide support, but rising interest rates would weigh on silver as a non-yielding asset. Another key date looms: July 13, 2026, when the bilateral Section 232 agreement expires — a deadline that could reignite Comex arbitrage and put fresh pressure on the physical market. For now, the macro backdrop limits downside risks, but the combination of a shallow Comex, a fragile London vault recovery, and a deepening structural deficit leaves silver in a precarious balance.
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