Silver price surge above $86: supply–demand signals for mine project teams
Reviewed by Tom Sullivan
First reported on MINING.com
30 Second Briefing
Silver surged as much as 6.6% to above $86/oz on Wednesday, recovering about a third of its late-January crash, even as the Silver Institute projects a sixth consecutive annual market deficit in 2026 driven by investment demand rather than industrial offtake. The Institute expects solar and other industrial demand to decline “moderately” as manufacturers seek substitutes at current price levels, while BMO Capital Markets argues inventories remain adequate when measured against actual ornamental and industrial consumption. Physical tightness is acute in China, where speculative buying has left producers and traders unable to meet order backlogs, inflating front‑month contract premiums.
Technical Brief
- Price action follows a late‑January crash where silver fell as much as 36% from peak levels.
- Over the past year, silver’s price still sits more than 160% higher despite the selloff.
- At the annual peak, silver traded above $121/oz, nearly quadruple its value 12 months earlier.
- Some traders now describe silver as “untradeable” due to severely limited sellable physical inventory.
- In China, producers and traders face order backlogs driven by recent speculative buying activity.
- That Chinese tightness is inflating premiums on front‑month silver contracts relative to deferred months.
- BMO Capital Markets argues “deficit” metrics should reference ornamental and industrial consumption that permanently removes bullion.
- Commerzbank analysts warn that extreme precious‑metal volatility is damaging investor confidence in the segment.
- BMO expects silver to become cheaper relative to gold as physical availability improves over coming years.
Our Take
With silver up more than 160% year-on-year and trading above $86/oz, the economics of marginal US and Mexican primary silver projects in our database likely move into the money even at substantial cost inflation, which could pull forward feasibility and restart decisions that looked unrealistic at sub-$30 pricing.
The Pentagon’s presence in this silver-focused piece echoes recent coverage of US antimony and silver processing in Idaho and the USGS import-reliance data, signalling that silver is increasingly being framed alongside antimony and other critical minerals in US supply-chain planning rather than purely as a precious metal.
Recent gold coverage in our database, including the early-February rebound to around $5,070/oz, shows gold moving far less violently than silver; this divergence raises hedging and financing challenges for polymetallic producers whose revenue mix is now far more exposed to silver price swings than their historical gold-linked models assumed.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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