Strategist: Silver faces supply shortage for the sixth consecutive year, yet struggles to return to $120 high.
2026-04-17 10:40:28
Despite the silver market facing its sixth consecutive year of supply shortage, Mike McGlone, senior market strategist at Bloomberg Intelligence, believes this fundamental boost may not be enough to push silver prices back to their January highs.
In his latest silver market analysis report, he reiterated his relatively cautious long-term outlook for silver. He explicitly stated that silver prices are likely to fluctuate within the $50 to $100 range for an extended period, with little chance of a significant trend breakout.
Currently, silver prices have failed to break through the key resistance level of $80/ounce. While a short-term rebound is still possible, McGraw points out that silver prices are generally weak and unlikely to maintain a strong upward trend.
McGraw does not completely rule out the possibility of silver prices surging back to the January highs of over $120 per ounce, but he emphasizes that a significant price increase would trigger a fundamental shift in supply and demand fundamentals.
He stated, "A key conclusion is that the existing supply shortage will be transformed by the parabolic rise in prices, potentially entering a recovery phase driven by low prices."
McGraw points out that silver's current price movement is very similar to several typical parabolic rallies in history. This rally, which began in mid-2025, saw a premium of up to 2.6 times its 10-year moving average at its peak, highly consistent with the characteristics of the sharp rally in 2011.
He wrote in the report: "We see clear similarities between the two. Silver is currently around $79 and seems poised to remain in the $50 to $100 range for an extended period. The risk of normal mean reversion is more likely to be towards the 10-year moving average around $33, rather than staying above $100 for an extended period."
Furthermore, McGraw specifically mentioned that silver's 180-day volatility is currently more than five times that of the S&P 500, the highest level since 1980. At that time, silver prices approached $50, a high that was matched in 2011 and will not be surpassed until 2025.
According to the Silver Institute's latest annual Silver Survey, the global silver market is projected to experience a supply shortage of 46.3 million ounces in 2026, marking the sixth consecutive year of deficit. However, McGraw believes this shortage could be offset by a self-regulating mechanism triggered by high prices.
The report indicates that industrial silver demand is expected to decline by 3% this year, primarily dragged down by a 19% drop in silver consumption for photovoltaic solar panels. Meanwhile, investment demand will be the main driver of the market this year, projected to grow by 18% year-on-year, with silver-backed exchange-traded products (ETPs) expected to see approximately 30 tons of physical funds flowing into the market.
McGlone believes that despite the structural shortage, high prices will stimulate increased mining production, recycling, and industrial substitution, thus limiting the potential for further significant increases in silver prices.
Mike McGlone's analysis shows that although the fundamentals of silver remain in a supply shortage, the self-regulating effect of supply and demand caused by the rapid price increase, as well as the pressure of historical mean reversion, will jointly constrain silver's performance. He predicts that in the near future, silver may continue to fluctuate within a wide range of $50 to $100, and will find it difficult to quickly return to previous highs.
For investors, McGraw's viewpoint reminds the market that while focusing on the long-term shortage logic of silver, it is also crucial to pay close attention to the actual impact of price increases on supply and demand dynamics. Given the current uncertain global economic environment, silver, as an asset with both industrial and investment attributes, will continue to face significant challenges in its price movement.
Overall , while the fundamentals of the silver market remain supportive, a significant breakout in the short term is unlikely. Investors should remain cautious and pay close attention to the combined impact of changes in industrial demand, macroeconomic trends, and geopolitical factors on silver prices.
Spot silver daily chart source: EasyForex
At 10:39 AM Beijing time on April 17, spot silver was trading at $78.49 per ounce.
In his latest silver market analysis report, he reiterated his relatively cautious long-term outlook for silver. He explicitly stated that silver prices are likely to fluctuate within the $50 to $100 range for an extended period, with little chance of a significant trend breakout.
Current market trend: Struggling to hold above the key resistance level of $80.
Currently, silver prices have failed to break through the key resistance level of $80/ounce. While a short-term rebound is still possible, McGraw points out that silver prices are generally weak and unlikely to maintain a strong upward trend.
McGraw does not completely rule out the possibility of silver prices surging back to the January highs of over $120 per ounce, but he emphasizes that a significant price increase would trigger a fundamental shift in supply and demand fundamentals.
He stated, "A key conclusion is that the existing supply shortage will be transformed by the parabolic rise in prices, potentially entering a recovery phase driven by low prices."
Historical lessons: Highly similar to the parabolic trend in 2011
McGraw points out that silver's current price movement is very similar to several typical parabolic rallies in history. This rally, which began in mid-2025, saw a premium of up to 2.6 times its 10-year moving average at its peak, highly consistent with the characteristics of the sharp rally in 2011.
He wrote in the report: "We see clear similarities between the two. Silver is currently around $79 and seems poised to remain in the $50 to $100 range for an extended period. The risk of normal mean reversion is more likely to be towards the 10-year moving average around $33, rather than staying above $100 for an extended period."
Furthermore, McGraw specifically mentioned that silver's 180-day volatility is currently more than five times that of the S&P 500, the highest level since 1980. At that time, silver prices approached $50, a high that was matched in 2011 and will not be surpassed until 2025.
Supply and demand fundamentals analysis: Shortages exist, but industrial demand has declined significantly.
According to the Silver Institute's latest annual Silver Survey, the global silver market is projected to experience a supply shortage of 46.3 million ounces in 2026, marking the sixth consecutive year of deficit. However, McGraw believes this shortage could be offset by a self-regulating mechanism triggered by high prices.
The report indicates that industrial silver demand is expected to decline by 3% this year, primarily dragged down by a 19% drop in silver consumption for photovoltaic solar panels. Meanwhile, investment demand will be the main driver of the market this year, projected to grow by 18% year-on-year, with silver-backed exchange-traded products (ETPs) expected to see approximately 30 tons of physical funds flowing into the market.
McGlone believes that despite the structural shortage, high prices will stimulate increased mining production, recycling, and industrial substitution, thus limiting the potential for further significant increases in silver prices.
Overall Outlook: Silver prices are likely to fluctuate in the long term.
Mike McGlone's analysis shows that although the fundamentals of silver remain in a supply shortage, the self-regulating effect of supply and demand caused by the rapid price increase, as well as the pressure of historical mean reversion, will jointly constrain silver's performance. He predicts that in the near future, silver may continue to fluctuate within a wide range of $50 to $100, and will find it difficult to quickly return to previous highs.
For investors, McGraw's viewpoint reminds the market that while focusing on the long-term shortage logic of silver, it is also crucial to pay close attention to the actual impact of price increases on supply and demand dynamics. Given the current uncertain global economic environment, silver, as an asset with both industrial and investment attributes, will continue to face significant challenges in its price movement.
Overall , while the fundamentals of the silver market remain supportive, a significant breakout in the short term is unlikely. Investors should remain cautious and pay close attention to the combined impact of changes in industrial demand, macroeconomic trends, and geopolitical factors on silver prices.
Spot silver daily chart source: EasyForex
At 10:39 AM Beijing time on April 17, spot silver was trading at $78.49 per ounce.
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