Silver is heading into another year of structural deficit, helped by strong investment demand and historically low inventories, RBC Capital Markets notes, though the brokerage prefers gold over the medium term.
“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 said in a note, adding the physical market is unlikely to rebalance quickly.
She highlighted that the silver market closed 2025 with a 242 million ounces (Moz) deficit and expects it to remain undersupplied in 2026.
While higher prices could trigger some response, the analyst sees limited relief. Secondary supply and weaker jewellery and silverware demand may ease the deficit by roughly 50Moz, but that would still be insufficient to close the gap.
Mine supply is also unlikely to respond meaningfully in the near term due to permitting hurdles, aging assets and limited new discoveries, Calero said.
She expects supportive macro conditions to keep investment demand firm, noting the “right macro ingredients” — including a weaker dollar, demand for real assets and easier monetary policy — are in place.
Calero sees the gold-silver ratio holding around 60-65x in the next couple of years as tight physical conditions persist. However, over the medium term, she takes a more cautious view on silver, citing rising risks of industrial demand destruction, particularly in solar.
Industrial demand “remains the biggest question mark,” Calero stressed. Industrial demand represented about 60% of total silver consumption in 2025, and the metal now accounts for roughly 30% of average solar cell costs, prompting accelerated thrifting and substitution efforts.
Despite the constructive near-term setup, RBC ultimately favors gold producers. Still, it says silver equities “remain attractively valued compared to the broader market,” even though many names are already pricing in bullish silver assumptions.
“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.
Turning to equities, Calero highlighted Hochschild Mining and Coeur Mining as top picks, while Wheaton Precious Metals and OR Royalties are preferred in the royalty space.
“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.
That said, the analyst notes the silver sector still screens well versus the broader market despite recent underperformance relative to the metal.
Comments