UBS Warns Silver Upside Is Narrowing Fast
GFN – ZURICH: UBS has reduced silver price forecasts across all time horizons, citing a dramatic contraction in the projected 2026 market deficit and persistent weakness in investment demand that narrows near-term upside significantly.
UBS lowered its silver price targets following a reassessment of the market’s supply-demand balance, according to a note from strategists Wayne Gordon and Dominic Schnider (via Investing.com). The bank now forecasts silver at $85 for end-June, down from $100; $85 for September, down from $95; $80 for December, down from $85; and $75 for March 2027, down from $85. Spot silver currently trades near $73.80. The revision reflects a halving of UBS’s 2026 deficit estimate.
The bank previously projected a 300 million-ounce shortage but now expects the deficit to narrow to 60–70 million ounces, driven by three primary factors: reduced photovoltaic demand due to elevated prices, weaker silverware and jewelry consumption, and structural deterioration in investment positioning.
“For 2026, we expect weaker demand from photovoltaics due to elevated prices; higher prices are also weighing on silverware and jewelry demand. Together, we estimate these channels to reduce demand by about 50 million ounces,” Gordon and Schnider wrote.
Investment demand has eroded markedly. Total known ETF holdings have dropped nearly 70 million ounces to 794 million ounces, while net speculative futures positions stand just above 100 million ounces. UBS trimmed its full-year investment demand estimate to 300 million ounces from above 400 million, which the strategists described as “still generous given year-to-date outflows.”
Mine supply provides modest offset, with UBS expecting 2026 output of approximately 850 million ounces. The bank’s base case scenario projects silver trading broadly sideways. UBS anchored its outlook to gold, citing the precious metal as a stabilizing force and expecting the gold-silver ratio to drift toward 75–80 over time.
Tactically, the bank recommends selling volatility rather than establishing outright long positions, describing implied volatility as attractive for risk harvesting despite its decline from February’s 150% spike.
A long timeframe consolidation has to be seriously considered. ~50% of the technical analysts I follow agree, which means ~50% disagree. My bias says this is an 'old world' pre-2022 view, perhaps even an attempt to shake out the weak. My bias has a 50/50 chance of being wrong. So, how to react? For me, it'll probably be to minimize use of leverage, continue stacking bullion and miners, and just wait.
Interesting! If we go by the Silver Institute's 2026 survey they have a 76-million ounce deficit. Now it is hard to know who is telling the truth or how solid these numbers are since the Silver Institute has cooked the book. Last year they just altered the numbers from previous years without explanation. We know that London ran out, and China and New York were back stopping them, but now China has swung from an exporter to an importer, and silver is leaving New York. If there is going to be 76-million ounces, or more, consumed over what is produced this year, then the relevant question is, where is the silver it coming from?
Is this a free market or a bank run monopoly game?