Silver Outlook 2026: How $70 Is Becoming the Market's New Baseline

Decoupling From Gold: Silver’s Independent Story

Silver is no longer merely gold’s companion metal. As 2025 draws to a close with prices surging past US$66/oz, the market dynamics have fundamentally shifted. The driver is no longer speculation but structural market forces: persistent supply deficits, accelerating industrial demand, and an expanding footprint in artificial intelligence, electric vehicles, and renewable energy.

Unlike gold, which primarily functions as a store of value, silver has become essential to cutting-edge technology. Its superior electrical and thermal conductivity make it irreplaceable in high-performance applications. Combined with constrained above-ground inventories and price-insensitive industrial consumption patterns, silver’s price trajectory is increasingly independent. Industry consensus now points to $70/oz in 2026 not as a peak but as a new floor—signalling a structural revaluation of the metal.

The AI Infrastructure Boom: An Underappreciated Silver Catalyst

Among silver’s demand drivers, one of the fastest-growing yet least-discussed is artificial intelligence infrastructure. As hyperscale data centres proliferate to support AI model development by major technology companies, silver consumption in advanced hardware has surged dramatically.

The metal’s electrical and thermal properties make it indispensable in printed circuit boards, connectors, busbars, and thermal interfaces within high-density, power-intensive AI environments. Servers designed for AI workloads consume two to three times more silver than conventional data centre equipment. With global data-centre power demand projected to roughly double by 2026, this translates into millions of additional ounces being absorbed annually into hardware streams rarely subjected to recycling.

What distinguishes this demand is its price inelasticity. For corporations investing billions in data-centre infrastructure, silver represents a negligible fraction of total project costs. Even substantial price increases have minimal deterrent effect compared with the penalties of slower performance, elevated energy losses, or system instability. This structural demand floor continues to reinforce upward pressure in an already constrained market.

Five Years of Consecutive Supply Shortfalls: A Rare Structural Imbalance

Silver’s price momentum rests on material market fundamentals. The global market is experiencing its fifth consecutive year of supply deficit—a structural anomaly. Cumulative deficits since 2021 have approached 820 million ounces, equivalent to approximately one full year of global mine production.

While 2025’s annual shortfall is more modest than peaks witnessed in 2022 and 2024, it remains sufficient to further deplete above-ground inventory reserves. The constraint is deeply structural. Approximately 70–80% of silver production emerges as a by-product of copper, lead, zinc, and gold mining operations. This dependency severely limits the industry’s capacity to rapidly scale output in response to higher prices. Even if silver prices rise sharply, production cannot expand unless base-metal output also increases. New dedicated silver mining operations require a decade or longer to develop, rendering supply remarkably inelastic.

This structural rigidity is evident in exchange inventory data. Registered stocks have fallen to multi-year lows, with tight physical availability reflected in elevated lease rates and occasional delivery constraints. In such environments, even modest shifts in investment or consumption can produce outsized price movements.

The Gold-to-Silver Ratio: Signalling Continued Revaluation

The gold-to-silver ratio—a classic measure of relative valuation between the two precious metals—offers additional support for higher silver prices. With gold trading near US$4,340 and silver around US$66 as of December 2025, the ratio stands near 65:1. This represents sharp compression from levels exceeding 100:1 earlier in the decade and below the historical 80–90:1 range.

During precious-metals bull cycles, silver typically outperforms gold, pulling the ratio lower as investors seek higher-beta exposure. This dynamic has re-emerged throughout 2025, with silver gains substantially outpacing gold. If gold remains anchored near current levels into 2026, further compression toward 60:1 would mathematically imply silver above US$70. More aggressive ratio compression, while not the base scenario, would drive prices materially higher. Historical precedent shows silver frequently overshoots “fair value” during periods of constrained supply and sustained momentum.

Why $70 Functions as a Foundation Rather Than a Ceiling

For 2026, the more substantive question becomes not whether silver can reach US$70, but whether it can sustain that level. From a structural standpoint, the evidence points increasingly affirmative. Industrial demand is sticky, supply response is severely constrained, and above-ground inventory buffers remain minimal. Once a price level becomes the equilibrium clearing point for physical demand, it typically attracts buyers on weakness rather than sellers on rallies.

This shift has practical implications. Silver is transitioning from a tactical hedge or momentum trade into a fundamental industrial commodity with embedded financial characteristics. Participation in this structural rerating requires both market access and disciplined risk management—particularly important in an environment where price volatility persists.

The Broader Perspective: Silver’s Role in the Global Economy

Silver’s advance reflects far more than inflation hedging or monetary policy arbitrage. It represents a deeper structural transition in how the metal functions within supply chains, the mechanisms determining its price, and its essential role across industries. With AI infrastructure expanding rapidly, physical inventories tightening, and production capacity unable to respond quickly to price signals, the market is consolidating around a new equilibrium.

In this context, US$70 per ounce appears to function as a baseline rather than an aspirational target for 2026. For market participants, the relevant debate has evolved: the discussion is no longer whether silver has already appreciated excessively, but whether the market has comprehensively incorporated the metal’s expanding role within the global economy. Current evidence suggests this repricing remains incomplete.