Silver Price Forecast 2026: The Structural Case for $70 as Market's New Base

From Industrial Commodity Back to Premium Asset

Silver’s price trajectory tells a story that goes far beyond typical metal cycles. With prices surging past US$66/oz in late 2025, the narrative has fundamentally shifted from treating silver as merely gold’s secondary asset to recognizing it as a critical industrial material with its own demand drivers. This transition reflects deeper market mechanics: persistent supply shortages, manufacturing demand that refuses to bend to price increases, and an emerging role in artificial intelligence infrastructure that previous forecasts failed to anticipate.

Unlike gold, which serves primarily as a store of value and monetary hedge, silver’s utility is concentrated in applications where price sensitivity matters far less than availability and performance. This distinction is crucial for understanding 2026’s likely trajectory toward $70/oz as a floor rather than a ceiling.

The AI Infrastructure Boom: Silver’s Overlooked Demand Engine

The most significant and least recognized driver of silver consumption growth stems from the explosive expansion of artificial intelligence data centres. As global technology firms deploy massive computational infrastructure to support advanced AI models, the electrical and thermal demands have reshaped metal consumption patterns within these facilities.

High-performance servers and accelerators designed for AI workloads require substantially more silver than conventional equipment. The metal appears across multiple components: printed circuit boards, connector systems, power distribution busbars, and thermal management interfaces. These applications demand silver’s unparalleled electrical conductivity and thermal transfer capabilities—attributes that cannot be efficiently substituted.

Industry analysis suggests that AI-focused data centre infrastructure consumes two to three times more silver per unit than legacy server equipment. Given that global data-centre power consumption is projected to approximately double through 2026, the annual incremental silver absorption runs into millions of ounces. Critically, once this metal enters densely integrated hardware systems, recycling rates remain negligible, creating a permanent drain on available supply.

The economic calculus reinforces this demand rigidity. For enterprises constructing multi-billion-dollar computational facilities, silver costs represent a trivial percentage of total capital expenditure. Even a 30–50% increase in silver prices barely registers against the far greater costs of processing delays, energy inefficiency, or system failures. This price insensitivity creates a structural floor beneath industrial demand that disconnects silver from typical commodity price elasticity.

Five Years Running: The Supply Deficit Syndrome

Silver’s supply-demand imbalance has now persisted for a full quintet of years—a rare occurrence for commodity markets. Cumulative deficits since 2021 have approached 820 million ounces, equivalent to a full year of global mine production spread across that period.

The arithmetic is straightforward but the implications are profound. Annual shortfalls remain substantial despite modest improvements from 2024 peaks. Physical inventories, particularly exchange-registered stocks, have compressed to multi-year lows, signaling that the market is consuming available above-ground reserves to bridge the gap between production and consumption.

The constraint originates from supply architecture rather than price signals. Approximately 70–80% of silver originates as a byproduct during extraction of copper, lead, zinc, and gold. This co-production relationship creates structural rigidity—silver output cannot be scaled independently when prices rise. Primary silver mines require a decade or more from development to first production, making the supply curve notably inelastic relative to near-term demand surges.

Exchange lease rates have drifted higher as physical availability tightens, and sporadic delivery pressures have emerged across regional markets. In such constrained conditions, even modest incremental investment demand or industrial uptake shifts translate into disproportionate price movements.

The Gold-Silver Ratio: When Cheap Becomes Attractive

The relative valuation between gold and silver offers a revealing pricing signal. Currently trading near 65:1 (gold at approximately US$4,340/oz, silver around US$66/oz), this ratio has compressed sharply from 100:1+ levels earlier in the decade and sits below the modern 80–90:1 range.

Historical precedent matters here. During sustained precious-metals bull markets, silver typically delivers higher percentage gains than gold, a phenomenon driven by investor preference for leveraged precious-metal exposure. That pattern is already evident in 2025, with silver’s gains substantially outpacing gold’s performance.

If gold merely consolidates around current levels, mathematical progression toward a 60:1 ratio implies silver prices exceeding US$70. More aggressive mean reversion—still not the consensus forecast—would push pricing materially higher. Past bull cycles demonstrate that silver frequently overshoots theoretical equilibrium when supply remains genuinely tight and momentum remains constructive.

$70 as Foundation, Not Summit

The relevant question for 2026 shifts from whether silver can reach US$70 to whether that level can hold as a sustainable floor. Structurally, the case grows increasingly compelling. Industrial consumption remains resilient, supply constraints are genuine and multi-year in nature, and above-ground inventory buffers offer minimal relief.

Markets eventually price clearing levels for physical supply. Once established, such price floors tend to attract buying on weakness rather than selling on rallies, creating self-reinforcing dynamics. Silver is evolving from speculative hedge into foundational industrial commodity—a transition with profound implications for price stability and floor levels.

For market participants, this structural re-rating means silver requires different analytical frameworks than traditional momentum trades. The debate has matured beyond whether the current rally represents excessive speculation to whether current pricing adequately reflects the commodity’s emerging role in global economic infrastructure.

The Structural Case Remains Intact

Silver’s 2026 price floor of US$70 and potential for higher readings reflects legitimate supply-demand mechanics rather than transient momentum. AI infrastructure expansion, inventory depletion, and inelastic supply combine to create an environment where higher prices persist as the mechanism for equilibrating constrained supply against growing consumption.

The repricing toward US$70/oz as base-case pricing appears directionally sound based on available evidence. For investors and traders, the focus should center on whether market pricing has fully incorporated this structural transition in silver’s role and demand drivers.