The price of silver surged more than 4% today, reaching approximately $84.51 per troy ounce. This rebound concludes a period of intense volatility that had previously weighed on the iShares Silver Trust (SLV). Market attention is now refocusing on a fundamental supply-demand imbalance, as the market braces for what could be a sixth consecutive annual deficit.
Industrial Demand and Price Resilience
While the near-term price action has been turbulent, the long-term outlook remains decidedly positive. The iShares Silver Trust has gained 132% over the past year. This strength is primarily anchored by robust industrial consumption, especially from the solar energy and electric vehicle sectors.
Recent volatility was stark: in early February, the SLV plummeted 35.6% to around $68 within just five trading sessions, a move triggered by personnel announcements at the Federal Reserve. Despite these swings, the overarching trend is bullish, driven by tangible industrial demand.
Analysts at J.P. Morgan Global Research forecast an average silver price of $81 per ounce for 2026. This projection implies a more than doubling of the average price compared to 2025. The firm cites strong industrial offtake and evolving customs regulations as the key catalysts for this appreciation.
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A Deepening Supply-Demand Imbalance
Beneath the optimistic price forecasts, a nuanced market picture emerges, defined by a persistent structural deficit:
- Consecutive Shortfalls: The market is anticipated to record its sixth yearly deficit in a row during 2026, with an estimated gap of 67 million ounces.
- Shifting Industrial Use: Silver fabrication in the solar sector may dip 2% in 2026 to a four-year low of 650 million ounces. Companies are increasingly adopting material-saving techniques (“thrifting”) and exploring substitute materials.
- Constrained Supply Response: Mine production is projected to see only a modest 1% increase, reaching 820 million ounces, which is insufficient to close the demand gap.
In a related development, iShares expanded its physical holdings. On Wednesday, 764,000 new shares of the iShares Physical Silver ETC were issued at a price of $76.53 per share.
Cost Considerations for Investors
The iShares Silver Trust (SLV) offers exposure to physical silver through a substantial fund with assets under management of $47.3 billion. However, a critical factor for long-term returns is the cost structure when compared to similar products. For instance, the abrdn Physical Silver Shares ETF (SIVR) charges a fee of 0.30%, undercutting the SLV’s expense ratio of 0.50%. Differences in cost and liquidity remain pivotal considerations for investors.
Looking ahead to 2026, the projected 67-million-ounce market deficit is set to be the central pillar for price formation. With mine output expected to grow a mere 1%, it will continue to lag behind total industrial demand, ensuring that fundamental market undersupply remains the dominant narrative for silver.
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