Silver is likely to remain in a structural supply shortfall over the coming year, supported by firm investment demand and historically tight inventories, according to RBC Capital Markets, although the firm continues to favour gold over a longer investment horizon.
“Silver is entering its eighth deficit year with inventories at an all-time low and investment demand showing no signs of abating,” RBC analyst Marina Calero wrote in a research note, adding that conditions in the physical market are unlikely to normalise quickly.
Calero pointed out that the silver market finished 2025 with a deficit of 242 million ounces (Moz) and is projected to stay undersupplied through 2026.
While elevated prices could prompt some adjustment, she expects only modest relief. Higher secondary supply and softer demand from jewellery and silverware segments may narrow the deficit by roughly 50Moz, but this reduction would still leave the market in shortage.
Mine output is also unlikely to increase meaningfully in the short term due to permitting constraints, aging mining assets and a limited pipeline of new discoveries, Calero said.
She added that macroeconomic conditions remain supportive for investment flows, highlighting the presence of the “right macro ingredients” — including a weaker U.S. dollar, continued appetite for real assets and more accommodative monetary policy.
Calero expects the gold-to-silver ratio to hold near 60–65x over the next several years as tight supply conditions persist. However, she adopts a more cautious medium-term stance on silver, citing growing risks of industrial demand erosion, particularly within the solar industry.
Industrial demand “remains the biggest question mark,” Calero said. Industrial applications accounted for about 60% of total silver consumption in 2025, and silver now represents roughly 30% of average solar cell production costs, encouraging manufacturers to accelerate substitution and material efficiency efforts.
Despite supportive near-term fundamentals, RBC ultimately prefers gold producers. Still, the firm said silver-related equities “remain attractively valued compared to the broader market,” even though many stocks already reflect optimistic assumptions for silver prices.
“With solar accounting for 17% of the total demand (c.190Moz of demand in 2025) a silver-free solar technology could be the final cure to high prices,” the analyst wrote.
In terms of stock selection, Calero identified Hochschild Mining and Coeur Mining among her top picks, while Wheaton Precious Metals and OR Royalties are favoured within the royalty segment.
“Silver equities’ premium to gold producers is above the historical average, with producers in our coverage pricing in $100/oz, and royalties at $144/oz, above spot levels of $90/oz. Valuation, coupled with our higher expected upside in gold, leaves us favouring pure-gold producers,” she wrote.
Even so, Calero noted that silver equities continue to screen attractively relative to the wider equity market despite recent underperformance compared with the underlying metal.
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