Visible silver inventories at the world's two largest precious metals trading hubs have declined significantly in recent years, reinforcing concerns that the market may be heading toward a serious supply shortage.
However, several industry analysts argue that the situation is more nuanced than many investors and silver advocates suggest.
Registered silver inventories at the COMEX futures exchange in New York stood at approximately 79.9 million ounces in mid-May, more than 75% below the levels recorded during the pandemic-driven peaks of 2020.
Meanwhile, silver holdings in London Bullion Market Association (LBMA) vaults totaled around 27,454 tonnes at the end of April, equivalent to roughly 883 million ounces. That represents a decline of about 20% from the record high reached in January 2021.
Sixth Consecutive Year of Deficits
According to the World Silver Survey 2026, produced by Metals Focus on behalf of the Silver Institute, the global silver market is expected to record a deficit of 46.3 million ounces this year.
If realised, it would mark the sixth consecutive annual deficit.
Since 2021, an estimated 762 million ounces have been drawn from above-ground inventories. Supporters of the bullish silver outlook view this as evidence that available stocks are gradually being depleted.
Silver prices have also experienced extraordinary gains. After briefly exceeding $120 per ounce earlier this year, the metal remains substantially higher than it was twelve months ago.
Debate Over Deficit Calculations
Not all analysts agree that the market is moving toward a genuine physical shortage.
Jeffrey Christian, managing partner of CPM Group, argues that widely cited deficit figures depend heavily on how investment-related flows and inventory movements are treated within market accounting frameworks.
According to Christian, industrial consumption is often combined with investment demand in a way that can create a misleading picture of supply tightness.
Silver owned by investors does not disappear from the market in the same way as metal used in electronics, solar panels, medical equipment, or other industrial applications. The metal remains above ground and can return to the market if prices become attractive enough.
As prices rise, investor willingness to sell can also increase.
Large Volumes Remain Outside Official Statistics
A key issue in the debate is what inventories are actually being measured.
COMEX data only includes silver designated for delivery against futures contracts. LBMA figures, by contrast, represent total silver stored in London vaults, including holdings associated with exchange-traded funds, institutional investors, and private clients.
In addition, substantial quantities of silver exist outside these reporting systems.
According to Christian, much of the world's silver inventory is held in investment portfolios, industrial working stocks, and various stages of the manufacturing supply chain.
Each year, approximately 800 million ounces of silver are consumed in industrial processes. The metal passes through refiners, manufacturers, component suppliers, and distributors before ending up in products such as electronics, solar panels, batteries, medical devices, and jewelry.
These inventories rarely appear in public reporting systems but nonetheless remain part of the global supply base.
Higher Prices Could Unlock Additional Supply
Recycling is another important factor often overlooked in discussions about shortages.
As silver prices increase, the incentive to sell old jewellery, silverware, electronic waste, and other silver-containing products rises as well.
Historically, major price rallies have encouraged significant amounts of metal to re-enter the market through recycling.
Christian points to the dramatic price spikes around 1980 and during the years following the global financial crisis, when hundreds of millions of ounces were recovered and sold back into the market.
At the same time, industrial users are actively seeking ways to reduce silver consumption. The World Silver Survey forecasts a roughly 3% decline in industrial silver fabrication this year as manufacturers pursue efficiency gains and substitute materials where possible.
A Market Divided
The debate surrounding silver's future is unlikely to fade anytime soon.
On one side are analysts who point to multiple years of deficits, declining inventories, and growing demand from clean energy technologies and advanced electronics.
On the other hand are those who argue that substantial above-ground inventories, investor holdings, and recycling potential make the risk of an actual physical shortage far smaller than commonly portrayed.
The market's direction over the coming years will likely depend on the interaction between investor behaviour, industrial demand, recycling flows, and the willingness of existing holders to bring silver back into circulation as prices rise.
Silver Market by the Numbers
- COMEX registered silver inventories: approximately 79.9 million ounces
- LBMA silver holdings in London: approximately 883 million ounces
- Estimated 2026 market deficit: 46.3 million ounces
- Above-ground inventory reduction since 2021: approximately 762 million ounces
- Global industrial silver consumption: approximately 800 million ounces annually
- Major applications include electronics, solar panels, batteries, medical equipment, and jewellery
Sources: World Silver Survey 2026, Metals Focus, CPM Group, LBMA, COMEX.
Fact Check
A silver market "deficit" does not necessarily mean that physical silver is unavailable. The term describes the gap between the newly mined and recycled supply and the total annual demand. Significant above-ground inventories remain in the hands of investors, institutions, manufacturers, and private owners. As a result, analysts remain divided on whether current market conditions represent a genuine shortage or simply a redistribution of existing silver stocks.
