Are We Using More Silver Than We Mine?

Silver demand exceeded newly mined production by roughly 284 million ounces in 2025, and the market is forecast to post a sixth consecutive annual deficit in 2026. That is not the same as running out. We walk through the World Silver Survey 2026 numbers — the supply bridge, where demand actually goes, why three-quarters of mined silver is a by-product, and how long a price signal takes to become a new mine — and ask what six years of deficits, depletion and industrial demand really mean for a precious-metals core.

Published September 4, 2026 · Updated October 23, 2026 · 24 min read

Key Takeaways

• Yes, the world uses more silver than it mines: 2025 demand of 1,130.6 Moz ran about 284 Moz ahead of the 846.6 Moz that mines produced. Recycling, producer hedging and official-sector sales closed most of that gap, leaving a reported market deficit of 40.3 Moz — the fifth in a row, with a sixth (46.3 Moz) forecast for 2026.
• A deficit is not a shortage. Cumulative deficits since 2021 total roughly 762 Moz, but that is an accounting draw on above-ground stocks, much of which moved between vaults, products and investors rather than vanishing. What repeated deficits do is thin the readily available buffer, which is why London lease rates spiked in 2025.
• Industrial use is 58% of demand and it is already responding to price: photovoltaic silver demand fell from 197.5 Moz in 2024 to 186.6 Moz in 2025 and is forecast to drop 19% to about 151 Moz in 2026 as manufacturers thrift and substitute. Investment demand is forecast to move the other way, up roughly 18%.
• Mine supply is slow to respond because only about 26% of it comes from primary silver mines; the rest is a by-product of lead, zinc, copper and gold operations whose output decisions follow other metals. Existing mines must replace depletion before they can grow, and S&P Global puts the average discovery-to-production journey at roughly 14 to 16 years.
• The defensible thesis is not "the world is running out of silver". It is that the market may need a sustained period of sufficiently high prices to draw out recycling, mobilise stocks, moderate demand and fund new supply. For a precious-metals core, silver’s industrial exposure is both its strength and its extra volatility — a reason to size gold and silver as two separate decisions.

Silver occupies an unusual place in a precious-metals portfolio. Like gold, it has a long monetary history and remains an investment asset held through coins, bars and financial products. Unlike gold, a majority of annual silver demand now comes from industry. Its physical properties explain why: silver has exceptionally high electrical and thermal conductivity, and it is used in electronics, electrical systems, automobiles, solar cells, brazing alloys, catalysts and many other industrial applications. All quantities in this article are in million troy ounces (Moz) and all prices in US dollars (USD) per troy ounce; the market data are current through the World Silver Survey 2026, published April 15, 2026.

That combination of monetary and industrial demand has helped create one of the more interesting commodity-market imbalances of the current cycle: the world is demanding substantially more silver each year than its mines are producing. But that statement requires context. It does not mean the world is about to run out of silver. Recycling contributes significant supply. Above-ground stocks can bridge annual deficits. Investors may sell existing coins and bars. Manufacturers can reduce the amount of silver used in a product, substitute other materials where technically possible, or reduce production when prices become prohibitive.

The more useful question is therefore: how quickly can the silver market respond when demand persistently exceeds newly mined production — and what role does price play in bringing the market back toward balance? The answer appears to be that recycling and industrial demand can respond relatively quickly, while meaningful growth in mine production generally takes much longer. This piece builds on our earlier look at silver’s industrial engine and the silver investment case, but it asks a narrower question: what does a deficit actually mean, and what closes it?

Yes, Market Demand Is Greater Than Mine Production

The World Silver Survey 2026 estimates that global mines produced 846.6 Moz of silver in 2025. Total reported silver demand was approximately 1,130.6 Moz. Demand therefore exceeded newly mined production by approximately 284 Moz. But that was not the size of the market deficit. Recycling supplied another 197.6 Moz. Net producer hedging supplied 44.7 Moz, while official-sector sales contributed another 1.5 Moz. Total supply consequently reached approximately 1,090.4 Moz, leaving a reported market deficit of 40.3 Moz.

The distinction matters. Demand minus mine production is approximately 284 Moz; demand minus total supply is approximately 40 Moz. The first number shows how dependent the market is on recycling and other secondary supply. The second is the actual annual market balance under the Metals Focus methodology.

There is one additional methodological nuance. “Total demand” includes coin and net bar demand, even though investment bars and coins remain above ground and may later return to the market. Net investment in exchange-traded products is reported separately from total demand in the Metals Focus table. Demand should therefore not be interpreted as silver that has necessarily been physically destroyed or rendered permanently unavailable.

A Market Deficit Does Not Mean the World Is Running Out of Silver

A commodity market can operate in deficit as long as previously accumulated inventories are available to fill the gap. Metals Focus estimates that, including the current 2026 forecast, cumulative silver-market deficits since 2021 amount to approximately 762 Moz. That represents an accounting draw on above-ground stocks — not 762 Moz that have necessarily vanished from existence.

~762 Moz Cumulative silver-market deficits, 2021 through the 2026 forecast. An accounting draw on above-ground stocks over six years. Some of that metal moved from commercial inventories into private holdings, from London into US exchange warehouses, from bullion inventories into exchange-traded products, or into products that can later be recycled — and some into highly dispersed industrial uses where recovery may never be economic.

The amount and location of silver matter. Metal held in a long-term investor’s vault technically remains above ground, but it may not be available to an industrial user at the prevailing price. A market can therefore contain substantial silver inventories and still experience periods of tight immediate liquidity. This became visible in the London market during 2025, when changing inventory locations, exchange-traded-product inflows and physical buying contributed to unusually high lease rates. Philip Newman, managing director of Metals Focus, said in April 2026 that London lease rates had largely normalised, but that another liquidity squeeze remained possible if physical and investment demand again converged.

A lease rate is the price of borrowing metal. What a loan of bullion requires of the borrower, and what it changes for the owner who lends, are the subject of our article on Tether’s bullion lending.

The important point is not that silver has disappeared. It is that repeated deficits can reduce the market’s readily available buffer, potentially making price more sensitive to relatively small changes in investment demand, industrial buying or inventory flows.

Industrial Demand Is Large — but It Is Not a One-Way Bullish Force

Industrial applications consumed an estimated 657.4 Moz of silver in 2025, approximately 58% of total reported demand. Electrical and electronics applications accounted for 449.5 Moz, including approximately 186.6 Moz used in photovoltaics. Industrial demand was supported by investment in data infrastructure, automobiles and electrical grids, but total industrial use nevertheless declined by 3% from 2024. The remaining 42% of demand is split between physical investment in coins and bars, jewellery, silverware and a shrinking photographic sector.

Solar provides an especially important lesson. Photovoltaic silver demand reached approximately 197.5 Moz in 2024 and declined to 186.6 Moz in 2025. Metals Focus forecasts a further decline to approximately 151 Moz in 2026, a reduction of roughly 19% in one year. This is expected even as global solar installations continue, because manufacturers are reducing silver loadings and pursuing substitution as silver becomes a larger component of manufacturing cost.

This means the common argument — more solar panels will automatically require proportionately more silver — is too simplistic. Growth in the number of panels can be partly or entirely offset by a reduction in the amount of silver used per panel. The broader industrial base is more diversified than solar alone. AI-related data infrastructure, automotive electronics, power grids, electrical equipment and other applications can support demand even when photovoltaic use weakens. Nevertheless, total industrial demand is forecast to decline again in 2026 to approximately 639.6 Moz.

Investment demand may move in the opposite direction. Newman summarised the possibility this way:

You could see losses in the industrial sectors being mopped up by the retail investment.

Philip Newman, managing director, Metals Focus (April 2026)

That observation is important. Silver prices do not depend solely on factory consumption. Industrial demand can weaken while investment demand strengthens, particularly when monetary, geopolitical or momentum-driven factors attract investors.

Why Can’t Miners Simply Produce More Silver?

The structure of silver mine supply makes it unusually slow to respond to a silver-specific price signal. Only about 26% of 2025 mine production came from primary silver mines, where silver is the principal economic driver. Roughly three-quarters was recovered from mines principally associated with lead, zinc, copper, gold or other metals. Lead and zinc operations remained the largest source of mined silver in 2025.

This creates an important difference between a primary silver mine and a polymetallic operation. When silver prices rise, a primary silver producer may have a strong incentive to expand its mill, accelerate underground development, process previously marginal ore, restart a suspended operation, or finance a new project.

At a copper, lead or zinc mine, however, silver may be a secondary contributor to project economics. A higher silver price improves the value of the mine’s by-product or co-product revenue, but production decisions may still be governed primarily by:

• the price and grade of the main metal;
• processing capacity;
• mine sequencing;
• metallurgy and recovery;
• capital requirements;
• permitting;
• and the economics of the overall deposit.

Silver is not always economically insignificant at these mines, and “by-product” should not be interpreted as “irrelevant”. But the mine will not necessarily expand simply because the silver price doubled. This helps explain why silver mine supply can be relatively inelastic over shorter periods.

Existing Mines Must Continually Replace What They Extract

A mine is a depleting asset. Every year of production removes ore from an economic deposit. Exploration can discover extensions, engineering can convert resources into reserves, and higher prices can make previously marginal material economic. But the industry must first replace depleted ounces before it can produce sustained net growth.

It is reasonable to say that miners frequently prioritise more economically attractive ore zones. It would not, however, be accurate to say they always extract the highest-grade material first. Mine sequencing is constrained by geology, access, geotechnical stability, ventilation, stripping requirements, metallurgy, production blending and the need to maintain consistent mill feed. In some periods a mine’s grade rises; in others it falls. Nevertheless, mature mines can eventually encounter lower-grade zones, greater depth, increased dilution, more difficult metallurgy, longer haul distances, higher waste movement or lower recovery rates.

Fresnillo’s second-quarter 2026 operating report provides a recent real-world example. Silver production at several operations was affected by lower ore grades, dilution and differences from geological models. At the Ciénega operation, the company also cited depletion of sulphide material at Taspana, a greater proportion of oxide feed and lower recovery. These are company- and mine-specific results, but they demonstrate how grade, depletion and metallurgy can reduce output even while a mine remains operational.

Higher prices can partially offset this process. A company calculates reserves using assumptions about metal prices, costs, recoveries and cut-off grades. When a sustained price increase makes lower-grade material economic, some material previously classified outside the reserve can potentially become mineable. First Majestic’s 2025 reserve and resource update illustrates this mechanism. The company — whose chief executive, Keith Neumeyer, is one of the sector’s most vocal advocates of the silver-supply thesis — attributed part of its reported resource growth to exploration success and updated metal-price assumptions; at one operation, higher assumed prices contributed to lower cut-off grades and increased contained resources. That is a company-specific example rather than proof of an industry-wide trend, but it shows how price can extend the economic boundary of a deposit.

The rock did not change. The economics did.

Years of Lower Prices Weakened the Future Project Pipeline

Silver spent a prolonged period at much lower prices before the recent rally. From 2015 through 2019, annual average silver prices remained within a relatively narrow range of approximately $15.68 to $17.14 per ounce. The annual average subsequently rose, reaching $28.27 in 2024 and $40.03 in 2025.

$15.68–$17.14 Range of annual average silver prices, 2015 through 2019. Five years in which the annual average never left a $1.50 band. The 2024 average was $28.27 and the 2025 average $40.03 — but mines operating today often reflect discoveries and capital decisions made during the lean years. Source: London Bullion Market Association annual averages.

How 2025’s rise, and the record that followed in January 2026, compare with silver’s January 1980 peak is the subject of our article on silver’s two peaks.

That does not mean every silver mine was unprofitable during the lower-price period. Mine economics vary greatly depending on grades, costs, jurisdiction, infrastructure and revenue from other metals. But lower long-term price assumptions can make marginal projects harder to finance. They can also cause companies to defer large greenfield developments, focus capital on existing operations, reduce grassroots exploration, acquire projects in other commodities, or prioritise shorter-payback investments. The effects appear only gradually because mines operating today often reflect discoveries and capital decisions made many years earlier.

The broader mining industry continues to show this preference for lower-risk, near-mine work. S&P Global estimated that global nonferrous exploration budgets declined slightly to $12.4 billion in 2025, the third consecutive annual decline. Minesite exploration accounted for a record 45% of budgets, while grassroots exploration fell to a record-low 21% share.

Those figures cover nonferrous mining broadly, not silver alone. In fact, higher precious-metals prices supported improved exploration funding in parts of the sector during 2025. Junior and intermediate financing also recovered, although much of the capital was directed toward development and existing projects rather than early-stage discovery. That is the balanced interpretation: capital is returning, but much of it is initially flowing toward existing mines, advanced projects and acquisitions — not immediately creating entirely new producing mines.

The Supply Response Has Already Started

Higher prices are not being ignored by the industry. The response is already visible in several areas:

• Global mine production increased 3% in 2025 to 846.6 Moz.
• Recycling increased 2% to 197.6 Moz, a 12-year high.
• Some producers have raised the long-term metal-price assumptions used in resource and reserve calculations.
• Exploration and development financing for precious metals improved.
• Companies are investing in expansions, reserve replacement and advanced projects.

But this has not yet translated into rapid global mine-supply growth. For 2026, Metals Focus forecasts mine production remaining broadly flat at approximately 844.1 Moz. Modest growth at a limited number of assets is expected to be offset by grade-related and operational pressures elsewhere. Recycling, rather than mining, is forecast to provide the more immediate supply response, rising almost 7% to approximately 211.3 Moz. That is consistent with how commodity supply normally responds: scrap and existing inventories respond first, existing operations and brownfield expansions follow, and entirely new mines generally respond last.

How Long Will It Take Mining to Catch Up?

There is no reliable single date. An already-permitted expansion at an operating mine may add production relatively quickly. A suspended operation with intact infrastructure might be restarted within a few years. An advanced project with completed engineering, financing and permits is in a different position from an early-stage discovery. A newly discovered deposit may require resource-definition drilling, metallurgical testing, economic and engineering studies, environmental assessment, consultation and permitting, financing, detailed design, construction, commissioning and production ramp-up.

It’s a five-to-10-year process; it’s not an immediate fix.

Maria Smirnova, CIO and lead portfolio manager for silver strategy, Sprott Asset Management

That is an informed asset-manager estimate, not a universal industry timetable. Smirnova and Sprott are structurally bullish on precious metals and manage products that benefit from stronger precious-metals markets, so that perspective should be understood when using the quote. Mining-wide S&P Global research illustrates how long the complete process can become. Its July 2026 study of 232 mining assets found an average of approximately 14 years from discovery to production for 203 operating mines, nearly 30 years for 29 feasibility-stage projects that had not yet entered production, and a combined average of approximately 16 years across the full sample.

These are mining-wide figures, not silver-specific averages. They also measure time from discovery, not time from the current price increase. An advanced silver project may already be many years into that process. It would therefore be misleading to conclude that today’s higher silver price cannot produce any additional supply for 16 years. The appropriate conclusion is narrower: a price signal can change immediately. A large, new mine generally cannot.

The Market May Rebalance Before Mining “Catches Up”

A common mistake is to assume that mine production must eventually rise until it equals current demand. The market can rebalance through several channels at the same time, and most of them are faster than a new mine.

1. More recycling: Higher prices encourage holders of silverware, jewellery, industrial scrap and sometimes investment products to sell. Recycling is forecast to rise by approximately 7% in 2026.
2. Industrial thrifting: Manufacturers redesign products to use less silver while attempting to preserve performance. The forecast decline in photovoltaic silver demand is the clearest current example.
3. Substitution: Where technically and economically possible, manufacturers replace silver with copper or other materials. Substitution may be difficult in high-performance applications, but a sustained price increase creates a stronger incentive to attempt it.
4. Reduced price-sensitive demand: Jewellery, silverware and other discretionary uses can decline when prices rise faster than consumers’ purchasing power. Metals Focus forecasts further double-digit declines in jewellery and silverware demand during 2026.
5. Inventory release: Higher prices may persuade investors, dealers or other stockholders to release previously unavailable silver.
6. More mining investment: Higher margins improve producer cash flow, financing conditions and the economic viability of lower-grade or more difficult deposits.

These forces can close a deficit even if mine production remains relatively flat. That is why it is more accurate to ask what combination of price, recycling, investment flows, industrial efficiency and mine development will restore balance — rather than when mining alone will catch up.

Higher Prices Are Both the Signal and Part of the Cure

A persistent deficit can be supportive for price because a higher price helps attract metal from less willing sellers and encourages investment in new supply. But the same price increase also activates the mechanisms that can eventually weaken the deficit. The latest forecasts already show this process at work on both sides of the market.

That final point about investment demand is important. Industrial and consumer demand often respond negatively to higher prices. Investment demand may respond positively, at least for a time, because momentum, inflation concerns, monetary conditions or fear of scarcity attract additional buyers. A market deficit is not a mechanical price forecast. It is one important component of a broader market that also responds to investment flows, interest rates and currencies, economic growth, investor positioning, inventory location, liquidity, recycling and technological change.

What Does This Mean for Silver Investors?

The structural silver case is credible. The market is forecast to enter a sixth consecutive annual deficit. Mine supply is dominated by operations whose economics are partly or principally tied to other metals. Existing mines must continually replace depletion. Years of comparatively low prices constrained the development of some marginal projects. New discoveries and greenfield mines require long lead times. Those factors suggest that a rapid, silver-led surge in mine production may be difficult.

But they do not establish that the deficit must continue indefinitely, that a physical shortage is inevitable, that industrial demand can only rise, or that silver must reach any particular price. Higher prices are already encouraging recycling, reducing photovoltaic silver intensity, suppressing some discretionary demand and improving mining-project economics. The investment thesis is therefore not that the world is running out of silver.

The silver market may require a sustained period of sufficiently high prices to attract additional supply, mobilise existing stocks and moderate demand after years of limited project development and continuing mine depletion.

What Does Industrial Exposure Mean for a Precious-Metals Core?

Silver’s extensive industrial use is both a strength and a source of risk. It gives silver a demand base that gold does not have to the same degree: electrification, electronics, vehicles, grid investment and data infrastructure may support long-term silver use. But industrial exposure also makes silver more sensitive to manufacturing cycles, recessions, technological redesign, substitution and changing capital spending. Gold’s investment case is more directly associated with monetary demand, reserve diversification, currency risk, real interest rates, geopolitical uncertainty and wealth preservation. Silver participates in many of those same monetary themes, but combines them with industrial-commodity behaviour.

For someone constructing a strategic precious-metals allocation, this means gold and silver should not automatically be treated as interchangeable. Silver can complement gold by adding a different demand profile, greater sensitivity to a tightening physical market, potential leverage to industrial and monetary demand occurring together, and potentially stronger price movement in favourable conditions. It can also introduce greater volatility, more economic cyclicality, more exposure to substitution and thrifting, and greater physical storage requirements per dollar invested — a point we quantified in our look at premiums, spreads and the real cost of bullion.

An investor who determines that a strategic precious-metals core is appropriate should therefore make two separate decisions:

1. How large should the total precious-metals core be, given the investor’s objectives, risk tolerance, liquidity requirements and overall portfolio?
2. How should that core be divided between gold and silver?

There is no universal gold-to-silver allocation. An investor emphasising stability, monetary diversification and compact physical storage may favour gold more heavily. An investor willing to accept greater volatility in exchange for more exposure to the silver-specific supply and industrial thesis may choose a larger silver component. Our guide to when to increase or decrease a gold and silver allocation and our explainer on what the gold-silver ratio does and does not tell you cover the mechanics of that second decision; the portfolio builder turns it into a starting split.

Neither approach changes the distinction between physical metal and mining equities. Silver miners, developers and explorers remain operating businesses with management, financing, jurisdictional, execution and equity-market risk. They should not automatically be treated as equivalent to core physical silver.

What Silver Investors Should Watch

The structural thesis should be monitored rather than accepted permanently. Important indicators include:

• Mine production: is global output beginning to grow, or are new projects merely offsetting depletion and operational losses?
• Primary versus by-product supply: is the industry becoming more capable of responding directly to silver prices?
• Recycling: are higher prices bringing substantially more scrap and investment metal back to market?
• Industrial intensity: how quickly are solar and electronics manufacturers reducing the amount of silver used per unit?
• Exploration and development: is capital moving into new discoveries, or primarily into existing mines and acquisitions?
• Advanced-project approvals: are major projects receiving permits, financing and construction decisions?
• Available inventories and lease rates: is silver plentiful in the locations and forms required by market participants?
• Investment flows: are bars, coins and exchange-traded products absorbing metal or releasing it?

No single indicator determines the silver price. Together, they provide a better picture of whether the market is tightening — or whether higher prices are gradually solving the imbalance.

The Bigger Picture

Yes, measured silver demand is greater than annual mine production. In 2025, the difference was approximately 284 Moz. Recycling, producer hedging and official-sector sales covered most of that gap, leaving a total market deficit of approximately 40 Moz. For 2026, Metals Focus forecasts another deficit of approximately 46 Moz, which would be the sixth consecutive annual shortfall.

For investors, that creates a potentially constructive long-term setup — but not a guaranteed outcome. Silver’s industrial demand strengthens the strategic case for owning it in some portfolios. It also helps explain why silver behaves differently from gold and why it can experience much larger price swings in both directions. For a precious-metals core, that difference may be just as important as the deficit itself.

Sources and Methodology

The principal supply-and-demand data come from the World Silver Survey 2026, researched and produced by Metals Focus for the Silver Institute and published on April 15, 2026. The Silver Institute is an industry organisation, and the survey is sponsored by mining, refining and precious-metals companies. Metals Focus independently conducts the research, but the sponsorship context should still be understood. Broader exploration-budget and mine-development data come from S&P Global Market Intelligence. Company examples from Fresnillo and First Majestic are used to illustrate mine-specific mechanisms and should not be interpreted as representative forecasts for the entire industry. The 2026 supply-and-demand figures are forecasts and will be revised as additional operating, recycling and demand data become available.

Primary sources

• The Silver Institute / Metals Focus — World Silver Survey 2026 (April 15, 2026): 2025 supply and demand estimates, 2026 forecasts, cumulative deficit estimate and photovoltaic demand series
• The Silver Institute — Global Silver Investment to Remain Strong in 2026 Against the Backdrop of a Sixth Consecutive Annual Market Deficit (2026 outlook release)
• Kitco News — interview with Philip Newman, managing director of Metals Focus, on London lease rates and the 2026 outlook (April 2026)
• Kitco News — Maria Smirnova, Sprott Asset Management, on the five-to-10-year timeline for new silver projects
• The Morgan Report (David Morgan) — breakdown of 2025 mine production by primary silver versus by-product and co-product sources
• US Geological Survey — Mineral Commodity Summaries 2026, silver: physical properties and industrial applications
• London Bullion Market Association — annual average silver prices, 2015 through 2025
• S&P Global Market Intelligence — World Exploration Trends 2026 (nonferrous exploration budgets, 2025)
• S&P Global Market Intelligence — discovery-to-production timelines across 232 mining assets (July 2026)
• Fresnillo plc — second-quarter 2026 production report
• First Majestic Silver — 2025 mineral reserve and resource update