Silver is entering this year in the spotlight after prices gained almost 150% in 2025, with tight supply, rising industrial demand and investor activity underpinning sharply higher prices, according to Peel Hunt.

The brokerage has raised its first-quarter 2026 silver price estimate by 67% to $75/oz, its full-year 2026 forecast by 79% to $75/oz and its 2027 projection to $65/oz, while also increasing its long-run estimate from $30/oz to $50/oz.

Peel Hunt said on January 20 that the metal remained structurally undersupplied, with global mine production growth remaining weak. The firm estimated 2025 mine output increased by about 2% to 830-million ounces, marking the fifth consecutive year of deficits.

Base metal operations supplied over 50% of global production, with more than half located in Latin America, while primary silver mines accounted for just 28% of total output. The accumulated deficit between 2021 and 2025 is estimated at about 900-million ounces, continuing to pressure known above-ground stocks held in identifiable bullion inventories.

Investment demand has also increased sharply. Peel Hunt estimates net inflows to silver-backed exchange-traded funds (ETFs) reached almost 150-million ounces in 2025, with holdings rising to 864-million ounces by the end of December 2025, before falling slightly to 847-million ounces by January 16. ETF holdings, the firm said, remain a structurally important source of supply and can accentuate price movements.

Industrial demand is increasingly shaping the market, the brokerage said. Silver’s applications include its traditional role as a store of value and a critical industrial metal, particularly in sectors driving the green energy transition such as photovoltaics, electrification, and automotive production.

Peel Hunt noted that industrial demand now accounted for more than half of total consumption, up 50% since 2015. Rising prices had intensified efforts in the photovoltaic sector to reduce silver usage per solar panel, but the firm said alternatives remained limited, including silver-copper pastes and emerging pure copper substitutes.

Geopolitical and regulatory factors also continue to influence the market.

From January 1, China implemented a new licensing regime for silver exports, restricting eligibility to producers with a minimum output of 80 t/y and a $30-million credit line, effectively limiting exports to 44 companies. The move is intended to ensure domestic industries, including renewables, consumer electronics, and electric vehicles, remain sufficiently supplied.

Peel Hunt estimated that 60% to 70% of global refined silver supplies could be affected, as much of China’s silver output is a by-product of copper, zinc and gold processing.

The US also maintains an unresolved stance on silver as a critical mineral, Peel Hunt noted. In November 2025, the US Geological Survey published its list of critical minerals, prompting speculation that silver could face Section 232 tariffs.

A proclamation issued by US President Donald Trump did not impose tariffs or quotas, but indicated potential future agreements to secure supplies, floating price floors, and possible levies to support domestic producers. Leading up to this, inventories in the US had built up, while shortages in London and Shanghai created unusual arbitrage opportunities and volatility.

Historical comparisons underline silver’s current market conditions. The gold-to-silver ratio, which is used to assess production economics and relative valuation, averaged 60x since 1971 and 69x since 2000. The ratio reached 105x in April 2025, a level considered unsustainable, before falling to 50x following the surge in silver prices. Extreme relative pricing, combined with speculative activity, highlights the market’s volatility and the risk that gains may be unevenly distributed.

State actor activity has also influenced the market, Peel Hunt noted. In late 2024, the Russian government announced a plan to spend $535-million over three years purchasing precious metals, led by silver. Previously, the Gokhran – Russia’s State institution for storing precious metals and stones – acquired more than $1-billion in rough diamonds in 2008 and 2009, and holds large quantities of platinum, palladium and gold.

Similarly, the Saudi Central Bank bought silver ETFs, including the iShares Silver Trust and the Global X Silver Miners ETF, with combined holdings exceeding $40-million, indicating continued interest by sovereign investors.

Peel Hunt pointed out that silver’s price performance in 2025 illustrated its volatility and upward trajectory. The metal rose 148% for the year, with only two monthly losses in February and April, and ended the fourth quarter of 2025 up 53.6%.

Peel Hunt had forecast an average price of $47.5/oz for the third quarter of 2025, compared with the actual $55.10/oz, while the quarter closed at $71.70/oz, below the all-time high of $79.30/oz. Silver outperformed gold (up 11.9%), platinum (up 30.3%), palladium (up 27.9%) and Bitcoin (down 23.6%).

Looking forward, Peel Hunt said silver’s dual role as a store of value and industrial metal provided ongoing support. It also noted that while speculation has accelerated recent price gains, the structural deficit and strong industrial demand suggest a continuation of elevated, albeit volatile, prices.

Spot prices in early 2026 had risen almost 30% to more than $93/oz. Meanwhile, inflation-adjusted targets, depending on methodology, remain in the $150/oz to $250/oz range.