May 15, 2026
While the silver market has long assumed a massive supply deficit and sharply rising prices, the major Swiss bank UBS is now significantly revising its forecasts for the precious metal downward. The reason: According to analysts, weaker underlying demand is being offset by rising mine production.
The supply gap is shrinking dramatically
At the heart of the reassessment is the adjustment of the expected market deficit. While UBS had previously assumed a supply gap of 300 million ounces for 2026, this shortfall has shrunk to just 60 to 70 million ounces in the current estimate.
This decline results from two opposing trends. On the supply side, the bank sees a more favorable environment and expects global mine production to rise to around 850 million ounces of silver by 2026. At the same time, high silver prices are putting the brakes on consumption. In the photovoltaic, silverware, and jewelry sectors alone, the bank anticipates an aggregate loss in demand of about 50 million ounces.
Investors are pulling back
Consequently, investment demand is also declining noticeably. Analysts have cut their estimate for the full year from over 400 million to 300 million ounces—a figure that UBS still describes as “generous” in light of recent market movements.
Current data supports this skepticism: Global ETF holdings have fallen by nearly 70 million ounces to around 794 million ounces. At the same time, the net positioning of speculative futures investors has retreated to just over 100 million ounces. Silver is thus losing momentum simultaneously in industrial applications and investment vehicles.
The New Price Targets: Sideways Instead of a Steep Rise
Against this backdrop, the upside potential is diminishing, according to UBS. In the base scenario, the strategists no longer expect a steep upward trend, but rather a broad sideways movement—albeit at a high level. The price targets have been capped accordingly across all time frames:
- End of Q2 2026: $85 per ounce (previously $100)
- September 2026: $85 (previously $95)
- End of 2026: $80 (previously $85)
- March 2027: $75 (previously $85)
Gold as an Anchor and New Trading Strategy
Despite the subdued outlook, the Swiss bank does not expect a sharp drop in silver prices. Gold acts as a stabilizer: Analysts continue to anticipate a general upward trend in prices for the yellow metal. Given the recently renewed correlation between the two metals, this also provides a downside hedge for silver. According to the bank, the gold-silver ratio is expected to stabilize in the range of 75 to 80 in the medium term.
From the perspective of UBS strategists, selling downside risks to generate returns is currently more attractive than building pure long positions. While implied volatility has calmed down since the extremes seen at the start of the year (in February, realized one-month volatility was nearly 150%), it remains at a high level from a historical perspective. The bank therefore favors strategies for the coming three months that capitalize on this volatility rather than betting directly on further rising silver prices.
Source：https://goldinvest.de/en/silver-under-scrutiny-why-analysts-are-lowering-their-forecasts
