UBS has reiterated its bullish stance on silver, arguing that the macroeconomic environment for real assets remains supportive and should ultimately drive prices higher despite recent market volatility.
A recent sell-off has pushed silver prices to roughly $60 an ounce, as investors sought liquidity amid escalating geopolitical tensions in the Middle East. The decline reflects investors’ “quest for liquidity amid ongoing military confrontations in the Middle East,” strategists Wayne Gordon and Dominic Schnider wrote in a research note.
Even so, the strategists cautioned against drawing long-term conclusions from the recent price drop. While silver may be “not an effective hedge against a sharp rise in uncertainty or liquidity needs, we believe investors should avoid extrapolating the recent price slump,” they said.
Silver has recently experienced pronounced price swings, with realized volatility approaching 85%. The metal has largely tracked gold’s movements, with the gold-silver ratio climbing close to 70x during recent geopolitical tensions before easing slightly.
Although silver exchange-traded funds have seen stronger outflows — roughly 64 million ounces, representing about 7.5% of peak holdings — UBS noted that the metal has only modestly underperformed gold so far this year.
In the near term, the bank expects potential pressure from industrial demand, which accounts for more than half of global silver consumption. UBS said risks to economic growth and continued volatility could weigh on both industrial and investment demand in 2026, potentially narrowing its projected deficit of roughly 300 million ounces.
Over the longer term, however, the bank sees stronger structural support for silver. Rising oil prices and concerns about fossil fuel supply may accelerate investment in solar power, increasing demand for silver used in photovoltaic technology.
“Since we see the backdrop for real assets as conducive—lower real rates in key economies, mounting debt challenges, and long-term USD weakness—the prospect for silver is one of higher prices,” the strategists wrote.
UBS expects silver to continue moving broadly in line with gold, forecasting the gold-silver ratio to remain near 70x over the next year.
From a strategy standpoint, UBS continues to favor volatility-selling approaches, noting elevated options volatility around 55–60%. The strategists recommend selling downside price risks to generate yield while silver remains above $55 per ounce over the coming three months.
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