What's in store for the silver market in 2026?
[Music]
Sam Azzarello: Welcome to J.P. Morgan's Making Sense. My name is Sam Azzarello, and I lead content strategy for global research. And today, we're going to have a fascinating discussion on silver with Gregory Shearer, head of Precious and Base Metals Research. Silver has been having a moment. With price volatility, news headlines, and heightened investor interest, we're going to deep dive into the silver market, and what it means for investors going forward. Greg, to start, can you walk us through the basics of the silver market and how it differs from its counterpart gold?
Greg Shearer: Yeah, thanks, Sam. I think the first thing that we need to understand with silver, vis-a-vis the marketing gold, is the size of the overall market, which is materially smaller than gold. When we look at essentially supply and demand, so the physical market on an annual basis of these metals, we're talking about silver being about a 10th of the size of, of gold. Even when we think about more of the financial aspects, for instance, when we look at aggregate futures open interest, silver is still about a fifth of the size of gold. What that really sets up here is, uh, is a metal that is smaller in market size, and then, obviously much more volatile, um, in terms of price performance versus gold. The other major difference, I would say, is in terms of the market composition, in terms of where you get demand. Um, in gold, it is primarily a market that's dominated by jewelry and investment demand. Industrial demand for gold is something only around 5% of annual demand. That's vastly different in silver. Silver, it's a precious metal, but it's also a very industrial metal. So we see, to some degree, something upwards of 60% of annual silver demand going into industrial applications just because it's such a good con- conductor, right? So this is mainly what we're talking about here is things where you're looking to move electricity in, in very, uh, high spec electronic products.
Sam Azzarello: That's a fascinating level set. What are the main drivers behind the dramatic rise in silver prices over the past year? And in your view, how sustainable do you think this momentum is for 2026 and beyond?
Greg Shearer: Yeah, I think we have to start with understanding that gold and silver, while, you know, different in terms of their market compositions are sister metals. They trade very sharply correlated to each other. Um, and so, we need to understand that, yes, gold has been on a, a, a very sharp rise since 2022, and really kicking off in 2025 when we get both central bank demand as well as global ETFs increasing as well. Um, so, you know, that push in gold up towards $5,000 per ounce, uh, at, at current trading is necessary for understanding the silver price formation over the course of the last year. Um, when we step back, I think the dynamic in silver gets quite interesting because it begins to tie into tariff uncertainty, and what that means in terms of a tight physical market. Coming into last year, what we saw in silver was a market that was in fundamental deficit basically since 2021. And when I'm talking about that, what we're talking about is on, on an annual basis, we were seeing demand for silver across investors, uh, you know, jewelry, as well as that industrial component I'm talking about, outstripping supply to the tune of about 100 to almost some years, 250 million ounces. That's pretty significant in a silver market where, you know, mine supply annually is, is something around eight, 850 million ounces, so very large deficits for multiple years in silver. Now, the important thing is silver does have a very large amount of above ground stocks to buffer that usually. But, we were drawing that for year after year for multiple years. Then we enter into 2025. There's worries that there could be a tariff on US silver imports, uh, aligned with, you know, a broader Trump policy, or more specifically Section 232 investigations around critical minerals, which silver was included in. And as a hedge to that, you see a lot of metal moving from London, which is the physical hub for silver, to New York, which is the futures hub for silver, to, to hedge that basis risk between prices that could be embedded from, from any sort of tariff. That leaves the London physical market very liquid. Essentially, the multiple years of deficit combined with this outsized movement of metal to New York leaves you in a very tight market. And that is critical, I think, to understanding silver's outperformance over the fourth quarter of '25, because it essentially sets up, uh, a market where you have this really sharp illiquidity, you have investor demand momentum, and that is really a trigger that, that sort of ignites this upside volatility.
Sam Azzarello: Excellent. Given the recent volatility, including a sharp pullback in price after the nomination of a new Fed chair, I wanna ask, is it fundamental drivers at play, or is there other factors? And what are your expectations for silver's price path in the second half of the year?
Greg Shearer: I think what we really began to see, particularly from late December, was this silver investment push taking on a life of its own, moving beyond the fundamentals that we track. So what we actually were seeing through the early parts of January was, you know, that physical tightness that I was talking about outside of the U.S., that was actually beginning to unwind. You saw Section 232 Critical Minerals Report be released by the Trump administration. They didn't tariff silver. Um, beyond that, we were also seeing global ETF holdings of silver, which throughout 2025 were closely tracking silver's price performance deviating from it. Essentially, silver prices continuing to move higher, whereas we were seeing a, a, an actual fall in global ETF holdings of, of silver. So there was this question of, okay, well, what's going on here? You know, who is, who is buying this? And one of the interesting dynamics that we saw over sort of mid to later in January was Indian and Chinese demand, you know, really, I think, underlyingly driven by retail demand, began to increase remarkably. Um, and so we saw a lot of investor buying that really kind of fueled us from that sort of $80 per ounce level up to the peak of silver before the recent rollover of $120 per ounce. And so, is it fundamental in a way, but we think it, it, you know, you saw this very large inflow of both Western and Asian investment demand really taking things to the extreme. Um, and that I think is important in understanding its reversal as well. Across the precious metals, yes, the catalyst was the, the nomination of Kevin Warsh that essentially rebounds the U.S. dollar. But, if we strip that away, what it really is, is a market here that was very much overextended. If you look at near term momentum signals, we were extremely stretched. And so, that's the catalyst, but it was just simply too much, too soon for the market to remain sustainable on that, on that rallying trajectory. And so, then we get this pullback. So the question that we're getting asked now is, okay, where do we go from here? And, and, and that gets to your second point, which is we still think in gold, we're very comfortable and confident in our buy the dip thesis, because when we look forward, we still think gold is a very clean structural story that has further to run. On silver, we're much more apprehensive, just because we don't necessarily trust that you have potentially shaken the full amount of froth out of this price. And so, it's not a thesis here that we think you're going to get a massive decoupling of gold and silver. They are going to still trade quite correlated, but as we've seen over the last couple of days illustrated, what you could have is a valuation issue in silver. Essentially, you could have a down day in gold, say, one or 2%, and that translates into almost 10 to 15% of a drop in silver. Um, and so, you know, from that perspective, I think it's notable just to, to see how we've traversed in the gold to silver ratio. Back in November, that was trading at about 80 to one. That dropped all the way to a peak in silver prices where that was below 50. We're only now even, at the moment, even after this recent volatility, still back up to 65 to one. So from that perspective, we're still a little bit cautious on silver in the very near term. We would reengage with it when we're more confident that you've actually gotten to a place where we think it's more fairly valued, and you've kind of removed some of this excess, uh, spec demand. Uh, when we go forward, what we're ultimately expecting is for silver prices to end the year something around $85 per ounce. So it's a little bit higher than we're trading as we're recording this, but we would ... I would characterize it as really thinking there's going to be a time to reengage with silver. We're a little bit cautious that that is still in the future.
Sam Azzarello: Greg, you mentioned tariffs and no market's conversation would be complete without talking about tariffs. So let's go a little bit deeper on Section 232. Can you put that in context for listeners and mention what it might mean for the outlook going forward?
Greg Shearer: Yes. So Section 232, uh, at its, at its core is essentially a statute of law that allows the President of the U.S. to essentially initiate a report around imports of minerals, materials, uh, goods that they think could be threatening to the U.S.'s national security. And the process goes through a period where they, they essentially, the Commerce Department builds a report and, and reports that to the president for him to decide whether or not it's appropriate to put in things like tariffs, or other import adjustments to stabilize the risk to national security. Where metals in particular have been tied into this is ever even since the first Trump administration, when we first got Section 232s on aluminum and steel, now that's rolled over into both copper throughout this year, and then critical minerals, which is a list of now almost 60 minerals spanning everything from base metals, to rare earths, to precious metals, including silver and, and PGMs or platinum group metals. And from that perspective, this investigation was initiated in April, and was finally concluded earlier in January. Um, what the administration ultimately decided was, yes, the importing of these critical minerals does potentially threaten U.S. national security, but where they deviated from recent past was they decided to essentially hold off on doing any sort of broad stroke tariffs across this mineral list. Um, and instead, you know, discussed essentially that we're going to engage with allies and trading partners as a way to potentially shore up these critical mineral supply chains, and that period of time is gonna last around 180 days for, for the U.S. and these bilateral trading partners to work on agreements and critical minerals. Why is it important? Well, at the end of the day, it's important for silver because the U.S. market is net import dependent on silver. And what's important about that is also that the COMEX contract is a duty paid contract, meaning that if you weren't to put in, uh, an import tariff on silver, that COMEX contract would essentially have to reflect that duty given the, the need for the U.S. to import, which could cause a lot of volatility between the spread of, for instance, London-based or rest of world silver prices and the, and the price of silver on the COMEX.
Sam Azzarello: Excellent. Thank you for the thorough explanation. You mentioned silver having industrial applications earlier on. How core are these uses to the price of silver, and how vulnerable is this demand to higher prices? Could we see demand destruction?
Greg Shearer: On a year in year out basis, we do think industrial demand applications are very core to essentially a investment thesis in silver. Like we said at the top, you're talking about something that is amounting to about 60% of the metal's end use demand. I think we need to understand that investment demand moves much quicker than changes in these downstream industrial components. So to kind of loop in the second part of your question, is it a threat? Yes, it is a threat. We think it's a very large threat to, uh, particularly a specific portion of industrial application that has been quite critical to silver fundamentals over the last five, six, seven years, which is solar applications. What you see in solar applications was, you know, something around 2016, silver demand in solar was around 80 million ounces. That's already grown to something around 200 million ounces, and was quite critical to moving the silver market into this deficit that we've been talking about since 2021. The issue is the solar panel pricing is under pressure, right? It's an overcapacity in terms of what China's producing. And what we've seen over this rapidly rising price environment is that silver prices have become almost an existential threat to the solar industry. When we look historically, silver as a share of solar panel pricing has made up less than 5%, actually closer on average to something around one and a half percent throughout history. With the rise in silver prices, that has gone north of 30%. And what we really think it means is that while silver is an amazing conductor, it can be substituted and it can be thrifted. And we've already seen some of the larger solar panel manufacturers in China announce thrifting plans to move into copper, uh, and other base metals, or even to advance silverless solar panels as we look forward. And so, we do think that this price rally has already set in motion, um, a, an acceleration in substitution trends, which will severely restrict the growth of, of, of solar applications in, in the broader silver demand environment going forward.
Sam Azzarello: Greg, you went deep on the use of silver for solar panels. What other industrial applications are there for the metal?
Greg Shearer: So, across the industrial landscape, the reason that silver is, is used very heavily is because it is one of the world's best conductors of electricity. And so, in general, what we're seeing it is within circuit boards, and brazing, and alloys, and soldering alloys, um, silver is used as a conduit for electricity within things like electric vehicles. It's also showing up in AI data centers. So there is a lot of correlation with what we see in terms of some of the structural growth demand drivers of thing, of a thing like copper. It's just that silver can do what copper does much better, but at a very much higher cost.
Sam Azzarello: So Greg, you mentioned substitution effects with respect to demand. What's happening on the supply side?
Greg Shearer: Yeah. I think what's really interesting from that standpoint is that silver primarily is mined as a byproduct of other metals. So of the total mine production of silver, only roughly around 30% comes from what we would call primary silver mines, where essentially the mine is built for a purpose to be mining primarily silver. Outside of that, where does silver come from? Well, it comes from copper mining, and lead and zinc mining as well, um, and, and also gold mining. But, the issue with that is it leaves silver mine supply relatively inelastic to movements of prices in silver. So we don't actually expect a significant growth on the mine supply, even with these prices materially higher. Where within the balance I think you could see movement is on scrap or recycled supply. This is essentially holders of silver, whether that's jewelry, um, or silverware, essentially going, and recycling, and, and almost physically cashing in on the trade. And that's where in our balances, we do see the potential for growth in the coming couple of years.
Sam Azzarello: Silver is often bucketed with gold. However, it lacks the same support from central bank buying. In your view, how does this difference affect silver? Is it an important aspect of market demand?
Greg Shearer: Yeah, I think it's actually quite critical when we're thinking about that valuation perspective, and we're still a little bit apprehensive here on silver vis-a-vis gold. What we've seen in gold since 2022 is a very strong and lasting structural shift and, and, and quite inelastic to rising prices in terms of central banks, mainly EM central banks looking to boost their allocation and boost their reserves of gold. Um, they do not view silver the same way, and this is an incoming question. Do we think central banks will move on from gold into other precious metals like silver or platinum? From my conversations, in my belief, I don't think that that is likely, which means that you don't have something like in gold where these central banks have been the biggest and most consistent dip buyers on this entire rally. Silver, that's not there. Now, I do think there's an interesting other place where we could think about government stockpiling of critical minerals that is becoming very topical, and more from an industrial standpoint, silver could get folded into that. Um, but we're not exactly there yet. It's something more for the, for the future.
Sam Azzarello: Greg, finally, what are the biggest unknowns or wild cards that could surprise the silver market in 2026, either to the upside or downside?
Greg Shearer: Yeah, I think one thing that we talked a lot about and unpacked this was tariffs. It wa- you know, it was very foundational to this rally in silver. The initial Section 232 report didn't go ahead with tariffs, but it still left open the optionality of the government eventually moving back to tariffs. If that happens, then we will see this whole trade of moving metal back to the New York likely revive and create an environment where actual physical liquidity outside of the U.S. begins to get tight, and you could get into an environment where this upside is opened for, for prices again. Um, the other thing I would say is when we're thinking forward, um, one of the biggest downsides would be something that just calls into question this broader precious metals rally. Whether or not that's a materially hawkish shift by the Federal Reserve, um, or if we were to, for instance, see gold come under pressure by some of its structural drivers unwinding, silver is going to continue to price off that in a more volatile manner.
Sam Azzarello: This has been a fascinating conversation. That's a great place to wrap up. Greg, thank you so much for joining and sharing your insights and expertise.
Greg Shearer: Thanks for having me, Sam.
Voiceover: Thanks for listening to J.P. Morgan's Making Sense. If you've enjoyed this conversation, share your feedback by leaving a comment or review wherever you listen to podcasts, and be sure to follow our channel so you don't miss an episode. This communication is provided for information purposes only. Please visit www.jpmm.com/research/disclosures for important disclosures.
Copyright 2026 JP Morgan Chase & Co. All rights reserved.
[End of Episode]
