Peter Smith
The silver market is heading into a sixth straight annual deficit - a rare run of sustained imbalance that keeps pressure on already-depleted physical inventories. According to The Kobeissi Letter, the 2026 shortfall is projected to widen to 46 million troy ounces, even as industrial fabrication softens and bar-and-coin demand rebounds.
The global silver deficit is projected to widen 15% year over year in 2026 to 46 million troy ounces, while cumulative stock depletion since 2021 has reached 762 million troy ounces.
Silver Market Balance Has Been Negative for Six Consecutive Years
The data tracks the silver market balance in million ounces and shows a clear shift from modest surpluses before 2021 to persistent annual deficits thereafter. The deepest shortfall in the series appears around 2022, followed by continued negative readings in 2023, 2024, 2025, and a forecast deficit for 2026. The sixth consecutive annual deficit signals a market that has spent years consuming more silver (XAG) - a market that remains in structural deficit as lease rates climb above 5% - than it is replacing, reinforcing the broader claim that physical conditions remain tight.
That matters because this is not a one-off disruption. It shows a market that has spent years running short, reinforcing the broader message that physical conditions are still far from balanced. The trend is attributed to robust bar-and-coin demand alongside falling supplies - a combination that aligns directly with what the underlying data shows.
Silver Supply and Demand Shift - But the Deficit Holds
The picture for 2026 is more nuanced than a single headline figure suggests. Industrial silver fabrication is expected to fall 3% year over year to a four-year low, while coin and bar demand is forecast to rise 18% - with support from recovering U.S. purchases. Meanwhile, total global silver (XAG) supply continues to face a squeeze even as gold (XAU) holds strong, with output projected to decline 2% year over year as miners pull back on production commitments made during last year's price surge.
Industrial silver fabrication is expected to fall 3% year over year to a four-year low, while coin and bar demand is forecast to rise 18% with support from recovering U.S. purchases.
In other words, the market is not tight because every category of demand is accelerating at once. It is tight because even with weaker industrial fabrication, supply is still projected to fall - and investment demand is still strong enough to keep the balance negative.
Silver Production Stays Below Peak as 762 Million Ounces Are Depleted
One important detail is that the 2026 deficit appears smaller than the extreme troughs recorded in 2022 through 2024. But that does not undermine the broader message. The issue is persistence. A sixth straight year below zero means the market still is not rebuilding inventories in any meaningful way - and that leaves physical silver exposed to renewed tightness if demand surprises to the upside or supply weakens further. It is worth noting that U.S. eyes a silver stockpile as production stays 8% below its 2016 peak, adding another layer to the structural supply constraint.
Total global silver supply is projected to decline 2% year over year as miners pull back on production commitments made during last year's price surge.
That is why the cumulative depletion figure of 762 million troy ounces since 2021 carries real weight here. It is not just about the size of one forecast bar. It is about the compounding effect of multiple years of deficits, declining stocks, and another year in which the market is still expected to run short - with no meaningful inventory rebuild in sight.
Peter Smith
