In my recent article about industrial demand, I talked about how higher silver prices give manufacturers more incentive to figure out ways to use less of it… and I still think that’s something worth paying attention to. But there’s another question that goes along with it… does silver actually need industrial demand to keep growing forever for us to be positive about its future?
Personally, I don’t think it does. I mean we spend so much time talking about solar panels, electronics, AI, and all the other things that use silver that I think we sometimes overlook something pretty obvious… there are a whole lot of us buying silver simply because we want to own it. We’re not manufacturing solar panels or building electronics. We’re stacking silver, and we’re doing it for reasons that don’t necessarily have anything to do with industrial demand. When you start looking at that side of the market, a forecast that might initially sound bearish actually gets a little more… let’s say “interesting”.
A Silver Surplus AND Higher Prices?
According to Kitco’s October 19 report, Metals Focus is forecasting a physical silver surplus of 37.3 million ounces in 2027. But here’s what’s kind of surprising… in that same outlook, they’re forecasting an average silver price of $84.40 for the year, with prices climbing above $90 in the fourth quarter.
Now obviously, those are their forecasts… and as I always say, nobody knows what silver is going to do. Because of that I certainly wouldn’t treat those numbers as any kind of guarantee. ..We’ve all seen enough silver price predictions over the years to know how that goes, and for most, it isn’t good. But think about what they’re actually saying here. They expect the physical market to move into surplus, and yet they’re still forecasting significantly higher silver prices. So how the heck does that work? If there’s more silver coming into the market than demand requires, wouldn’t that automatically mean lower prices?
Well first I think we need to be careful about how we look at these yearly deficits and surpluses. We hear the word “deficit” thrown around all the time in the silver market, and sometimes it’s almost presented as though we’re about to run out of silver. But that’s not really what it means. A deficit simply means that demand exceeded supply during that particular period, with existing supply making up the difference… it does NOT mean the world suddenly ran out of silver. Now, whether you can actually get the metal you need, in the form you need it, and where you need it, is another question entirely.
The same thing applies when we talk about a surplus. Even if the market starts rebuilding inventories, one year of additional supply doesn’t automatically undo years of drawing them down. Philip Newman, managing director of Metals Focus, discussed this in an October 16 interview with Money Metals. He pointed to the impact previous deficits have had on existing stocks, and explained why his firm can still be positive on silver even with a roughly balanced physical market.
Think about a business that’s been using inventory faster than it can replace it for several years. Eventually, it reaches a point where it’s bringing in a little more than it’s using. That’s certainly a good thing for the business, but does it mean inventory is suddenly back to where it was several years ago? Of course not. You’d still need to know how much inventory was left, how much had been drawn down, and how long it might take to rebuild those stocks. Looking at one year’s surplus doesn’t tell you all of that, and I think the same general idea is worth keeping in mind when we’re talking about silver.
There Are Buyers Who Aren’t Manufacturing Anything
Now here’s something I think we don’t talk about enough when we’re discussing the future of silver… and that’s that not everyone buying silver is doing it because they need the metal to manufacture something. In fact, a whole lot of us are buying it for completely different reasons. This is where investment demand becomes important… a company buying silver for electronics is looking at how much silver it needs to manufacture its products, but a stacker walking into their local coin shop to pick up a few silver rounds is making a completely different decision. Maybe they’re concerned about inflation, maybe they’re looking to diversify some of their savings, or maybe they simply prefer having a portion of their wealth in something physical they can actually hold… and let’s be fair, some people just enjoy collecting and stacking silver. Whatever the reason, those decisions don’t have anything to do with how many ounces the solar industry needs next year.
Now this is where I want to make a distinction… because those of you who have watched my channel for years have probably heard me say that physical silver stacking doesn’t really move the silver market. I’ve made that argument many times, and I still believe it’s true when we’re talking about individual retail transactions. If you walk into your local coin shop and buy ten silver rounds, that transaction isn’t going to move the spot price. The same is true when you sell a handful of Eagles back to your dealer. Most of what we’re doing as individual stackers is buying and selling metal that’s already out there, and the price we’re paying is generally being determined by a much larger market.
But there’s an important distinction between saying that an individual physical silver transaction doesn’t move spot prices and saying that investment demand doesn’t matter. Those are NOT the same thing, and when you start looking at the actual numbers, it’s pretty clear that investment demand is a significant part of the silver market.
According to the World Silver Survey 2026, global silver demand totaled approximately 1.13 billion ounces in 2025. Of that, 217.7 million ounces came from coin and net bar demand, which works out to about 19.3% of total measured demand. That’s almost one out of every five ounces, and we’re talking specifically about the physical investment category here, not industrial consumption. Industrial demand was still the largest category at 657.4 million ounces, or about 58% of the total, but physical investment was certainly not some insignificant little corner of the market.
BTW, there’s another part of this that’s worth mentioning… that 19.3% doesn’t include the investment flows into silver-backed exchange-traded products, or ETPs, which are reported separately in the survey. In 2025, Metals Focus reported another 278.1 million ounces of net investment into ETPs. Now, I want to be careful here because we can’t simply add those ounces to the physical demand total and claim that investment represented some new percentage of overall demand. The accounting is different, and ETP flows are tracked separately. But the point is that there’s a tremendous amount of silver-related investment activity beyond the coins and bars being purchased by individual stackers.
In the Kitco interview, Metals Focus tied its higher-price outlook to renewed investor participation, including money flowing into these silver-backed ETPs. That’s not quite the same thing as you or me walking into a coin shop and buying a few ounces, because these products give investors exposure to silver without personally taking delivery of bars or coins. But when investors collectively move substantial amounts of money into or out of silver, those decisions can absolutely influence prices… and unlike industrial manufacturers, those investors aren’t buying silver because they need it to produce something. They’re buying because they want exposure to the metal.
So when I say that physical stacking doesn’t directly move spot prices, I’m not saying stackers and investors don’t matter, in fact it’s quite the opposite. The individual buying a few ounces isn’t setting the global price, but millions of people buying silver, combined with investment funds and other large market participants, can have a very real impact on the market. I think that’s an important distinction, especially when we’re discussing whether silver needs industrial demand to keep growing in order for prices to move higher.
Now obviously, that works both ways. Stackers can sell their silver, investors can pull money out of silver-backed funds, and market sentiment can change pretty quickly. We’ve certainly seen that happen before, and very recently. If that renewed investment buying doesn’t actually materialize, then the Metals Focus forecast could be WAY off. We shouldn’t ignore that possibility just because we happen to like the idea of silver trading above $90. A forecast is still just a forecast, and the assumptions behind it matter every bit as much as the price target itself.
So Why Am I Still Positive About Silver?
Because I don’t think manufacturers figuring out how to use less silver somehow means people are going to stop wanting to own it. Those are two very different things, and I think sometimes we spend so much time focused on industrial consumption that we forget about everything else that can influence the price. Interest rates, inflation, the strength of the dollar, and the broader economic environment all deserve attention when we’re talking about precious metals. CME Group’s Erik Norland discusses some of these broader market factors here. There are plenty of reasons someone might want to own silver that have very little to do with how much of it goes into the next generation of solar panels.
Now of course, that does NOT make industrial demand unimportant. It’s a huge part of this market, and I’m certainly not suggesting we should ignore it. But if our entire argument for silver depends on industry using more and more ounces every single year, then we’re putting an awful lot of weight on something those same industries are actively spending money trying to reduce. As you can tell, that’s something I’ve been thinking about quite a bit lately… higher silver prices might be great for those of us who already own the metal, but for a manufacturer using millions of ounces every year, those same higher prices create a pretty strong incentive to find alternatives, improve efficiency, or simply figure out how to use less silver in each product.
Now just to be clear… that’s not necessarily a bad thing for silver stacking… it just means we need to be realistic about where future demand might come from, rather than assuming industrial consumption is going to keep climbing forever. Many of you who watch my channel already know that I definitely like silver as a long-term asset, as something that exists outside the FIAT dollar, that you can hold, feel, touch and see… but I don’t think we have to assume an ever-growing deficit to make that argument. We can acknowledge that manufacturers are getting more efficient, or that mine supply could improve, and still see plenty of reasons for stackers and investors to remain interested in the metal.
All of this is a big reason why I find this forecast encouraging… not because I think Metals Focus has somehow figured out exactly where silver prices are going next year, but because their outlook illustrates something I think is worth remembering… silver doesn’t necessarily need industrial demand to keep growing forever in order to have a positive future. The investment side of this market is substantial, and while the actions of individual stackers might not directly influence spot prices, the collective decisions of investors certainly can. That doesn’t guarantee higher prices, but it does mean we shouldn’t look at industrial demand as though it’s the only thing that matters.
Now whether all of that gets us to $90 silver is another question entirely. Maybe it does, maybe it doesn’t… who knows! But I certainly wouldn’t say the positive case for silver disappears just because the physical market moves closer to balance or even into a surplus. We don’t need to pretend every silver forecast is bullish, or that every deficit means we’re running out of metal. We can look at the numbers, acknowledge the risks, and still find good reasons to be interested in silver for the long term.
Stack Long… Stack Heavy!
These are my personal opinions and observations, not financial advice. Always do your own research before making investment decisions.
Sources and Figure Notes
- Kitco, October 19, 2026: Metals Focus interview and 2027 forecasts. One firm’s forecast, not an industry consensus.
- Money Metals, October 16, 2026: Interview with Philip Newman, on annual balances and earlier inventory drawdowns.
- CME Group, 2026: Erik Norland on supply and precious-metals prices. Broader pricing context, not a price target.
- Silver Institute / Metals Focus, 2026: World Silver Survey 2026. Source for the 2025 silver demand figures, including industrial fabrication, coin and net bar demand, and ETP investment flows.
Metals Focus produces the World Silver Survey for the Silver Institute. The Kitco and Money Metals interviews reflect the same research firm, not independent forecasts.
The forecast graphic illustrates the cited Metals Focus figures. Dollar figures are US dollars per troy ounce; volume figures are millions of troy ounces. The inventory and industrial-versus-investment graphics are conceptual illustrations, not market data. The 2025 demand chart uses reported World Silver Survey 2026 figures. ETP investment flows are reported separately and are not included in the chart’s physical demand percentages.