For decades, silver lived in the shadow of gold—seen largely as a metal for jewellery, coins, and small-ticket savings. But as we move into 2026, that image is rapidly becoming outdated. Silver is no longer just a precious metal; it is increasingly a strategic metal, embedded in the functioning of the modern economy.

After a powerful rally in 2025, silver prices have gone through a phase of consolidation. Yet prices remain firm—not because of speculative frenzy, but because of a simple, persistent reality: global demand has been exceeding supply for several years, and that imbalance is becoming structural.

A world that needs more silver

Global silver demand in 2026 is projected at about 1.2 billion ounces, while mine supply is expected to stay near 1.05–1.06 billion ounces, setting up a fifth consecutive year of structural deficit.

What is more important than the number itself is the nature of demand. In the past, silver prices were driven mainly by jewellery consumption and investor sentiment. Today, more than half of global demand comes from industrial use. Silver is now critical to sectors that define modern life—clean energy, electric mobility, electronics, data centres, and advanced computing.

Solar power is a key driver. Although manufacturers are trying to reduce the amount of silver used per panel, the sheer scale of new installations worldwide means total consumption continues to rise. By the end of this decade, solar energy alone could absorb 15–20 per cent of annual global silver supply.

Electric vehicles add another layer of pressure. Each EV uses silver in power systems, battery management, sensors, and safety components. As EV adoption accelerates across China, the US, Europe, and India, this demand becomes structural—not cyclical.

Why supply cannot catch up quickly

Silver is not like gold, where production responds more directly to price. Nearly 70 per cent of silver is mined as a by-product of copper, lead, and zinc mining. That means silver supply depends more on the economics of base metals than on silver prices themselves. New mines take years to develop, and many existing mines are facing declining ore quality.

The result is a persistent structural deficit of roughly 140 million ounces per year—a gap that provides long-term support to prices.

India: The silent giant in silver demand

India has quietly become the world’s largest consumer and importer of silver. In 2026, India’s annual requirement is estimated at 5,000–7,000 metric tonnes.

This is no longer just about jewellery. Nearly half of India’s silver demand now comes from industrial uses—solar manufacturing, electronics, and electrical equipment. With India targeting 500 GW of renewable energy capacity by 2030, silver demand from solar alone is set to remain strong for years.

Investment demand is also rising. As gold prices stay elevated, many investors are turning to silver as a more affordable entry into precious metals.

Can silver be replaced?

Manufacturers are trying to substitute silver with cheaper metals like copper and aluminium. But silver has unique properties—it is the best conductor of electricity, dissipates heat efficiently, and resists corrosion over long periods.

In solar panels, replacing silver with copper often reduces efficiency by 5–10%, making it unattractive for large-scale power projects. In electronics, medical devices, and advanced technology, silver remains difficult to replace. Substitution may slow demand growth at the margins, but it cannot remove the structural deficit.

A policy shift: RBI brings silver into the credit system

Recognising this structural shift in silver consumption and market dynamics, the RBI has permitted loans against silver from April 2026, effectively granting it a formal role as a financial asset alongside gold. By becoming acceptable as collateral for credit, silver moves beyond mere adornment and passive storage—it evolves into an active, productive asset within the financial system.

For households and small businesses, it means silver can be monetised without distress selling. For the market, it formally recognises silver as a financial asset, likely encouraging more transparent investment and stronger institutional participation.

Price outlook: A demand-driven story

Silver is now trading in uncharted territory, with no clear historical resistance levels. Prices are forming higher highs with periodic corrections—typical of strong long-term uptrends.

Based on current trends:

· Short term (2026): Prices have tested $100 per ounce owing to tight supply or strong investment flows (around ₹2.7 lakh per kg on MCX).

· Medium term (2–3 years): If annual deficits persist, silver could reach cycle highs of $150–$200 (₹4.0–₹5.5 lakh per kg).

· Long term (5 years, scenario-based): If demand rises toward 1.4–1.5 billion ounces without major supply growth, price discovery could push silver to $350–$400 per ounce (₹9.5–₹10.8 lakh per kg).

The author is CEO – Enrich Money

Published on January 25, 2026