The global silver market faces conditions ripe for another price squeeze, with analysts warning that six consecutive years of production deficits and low stockpiles could trigger dramatic price swings. The metal has already experienced extreme volatility, hitting record highs of $121 per ounce in January before plunging sharply in volatile trading.

Metals Focus forecasts a sixth straight year of deficit in 2026, with demand outpacing supply. The London market experienced chaos last October when strong Indian festive season demand pushed prices above $50 per ounce, partly due to low vault inventories and heavy buying by silver exchange traded funds. Unlike gold, silver lacks central bank support and derives over half its demand from industrial applications including solar panels and electronics.

Last year's 2 percent drop in global silver demand was driven by surging prices reducing industrial and jewelry consumption, particularly in solar panels where demand fell 6 percent as manufacturers switched to alternatives. While investment demand surged with bar and coin purchases up 14 percent and ETF investment tripling, supply increases of 7 percent still couldn't meet demand, reducing global stockpiles. The report warns that continued tightness will lead to thinner liquidity, more volatile lease rates, and larger price moves than investors have grown accustomed to.