Have you ever seen a market where on one side they're shouting that demand is cooling, while prices can still make people feel like they're on a roller coaster.
By the end of January 2026, silver had once surged to around $121 per ounce. As soon as this situation unfolded, the entire internet was in an uproar. Everyone was running around shouting, all with the tune of "silver is going to the sky." Those who bought silver index stocks were sending red envelopes in group chats. Those who were long on silver futures were brimming with confidence. They felt they had transformed from market investors into the chosen ones selected by God.
But what happened? By the end of May, silver gradually fell back to the $75 to $77 range. That means, if you rushed in at the peak in late January, in just a few months, your paper loss exceeded 30%.
This situation is very strange. You call it a bull market, but those who bought high are firmly trapped. You call it a bear market, but silver is still much higher than its price at the beginning of 2025.
The real world, the fantasy silver.
A global precious metals market with huge trading volume, prices first shot up like a rocket, then fell like a broken elevator.
Is this a distortion of human nature, or a moral decay? Is someone manipulating it? Is the bubble burst? Or is silver itself a junk asset?
Before answering this question, let me ask you a question. Suppose your home uses a water tower for water supply, and one day you suddenly discover there's no water when you brush your teeth. What would you do? Most people would first go to the roof to check if the water tower is malfunctioning, right? If you confirm the water tower is fine, what should be the next suspect?
You might ask me, why are you talking about silver problems but bringing up "water tower"?
I won't beat around the bush. In today's episode, I will get straight to the underlying logic and raise a question that has been intentionally or unintentionally ignored by ordinary investors:
The silver market is not that the "water tower" is empty, but that the "water pipe" has problems!
Let's first talk about the "water tower".
There has always been a sensational claim online: "Silver will only last ten years, and will be completely depleted in ten years."
This claim is very attention-grabbing, very suitable for clickbait articles, but I want to tell you a fact: this claim is mathematically completely untenable.
According to the latest mineral data released by the US Geological Survey in 2026, the world's known economic silver reserves are about 610,000 tons. Global mine production in 2025 was about 26,000 tons. Let's do a simple calculation: 610,000 divided by 26,000 is approximately 23.5 years. This is the silver reserve-to-production ratio.
So, silver will not be depleted in just ten years.
There is still silver underground, and there is still water in the tower.
But the problem is also sharp: a 23.5-year reserve-to-production ratio is not particularly generous in the bulk commodities market either.
Still referring to the life example mentioned earlier, let's focus on the "water pipe" problem.
This is like the water tower on the roof of your residential community. Theoretically, it has 1,000 tons of water, and the property management assures you with confidence that the water supply is more than adequate.
But the problem is, the water pipe connected to your home is only as thick as chopsticks. When you turn on the tap, what comes out is not a water flow, but a thin line. It takes half an hour to take a shower, and even cooking requires waiting your turn.
You call to complain to property management, but property management tells you grievously: "There's nothing wrong with the water tower! It's full of water!" But what's the use of a full water tower? If the water pressure is insufficient and the flow is not enough, you just can't use it.
You feel anxious, angry, and curse loudly: "Why not repair the building's water supply system in time! Why not use better water pipes!"
Property management is even more aggrieved: "The water supply system has been continuously repaired, and the pipes all use the latest standard components. It's just because we're currently in peak water usage period, please be patient and wait a little longer."
Did you notice? This is the logic of silver today.
The mines underground are the water tower. The silver that can be delivered, circulated, and obtained immediately in the market is the water in the pipes.
In the past few decades, this water pipe was thick enough. Mine production, smelting plants processing, silver bars entering London and New York vaults, then factories taking them to make electronic components, investors locking them in safes—the whole process, although complex, could still turn.
But in recent years, the situation has changed. Suddenly, there are many more outlets, but the inlets have not significantly thickened. The water in the pipes is starting to become insufficient.
This is the key issue: what truly determines drastic price fluctuations is not how much silver is theoretically underground, but whether the market can obtain enough, cheap, and immediately deliverable silver today, tomorrow, and next month.
This is the underlying reason why silver prices have become increasingly crazy in recent years.
Let's first look at the demand side.
In the 2026 World Silver Survey released by the Silver Institute and Metals Focus, a very counterintuitive point is: in the 2026 silver market, not all demand is growing. On the contrary, much demand is declining. Industrial demand is expected to fall, and jewelry and silverware demand will also be suppressed by high silver prices, while silver usage in photovoltaics is being continuously reduced by technological progress.
According to normal logical chain: demand falls, the market should release a loose signal. Supply exceeds demand, no one is scrambling for things, prices should fall.
But the most critical sentence in the report is: the 2026 silver market is expected to still be in shortage, with a gap of about 46.3 million ounces.
You heard right—although demand has fallen, the market is still short of silver.
And this is not the first year with such a gap.
The silver market has been in a structural shortage since 2021. The cumulative gap exceeds 700 million ounces. These gaps did not disappear out of thin air; they were gradually drawn from visible ground inventory. London vaults a little less, New York warehouses a little less, and physical silver behind ETFs is constantly moving in and out.
You might ask, if demand is falling, how can there still be a shortage.
The reason is actually on the supply side.
Silver has a very fatal characteristic: it's not a metal you can mine more of just because you want to. A very large part of global silver is not mined from pure silver mines, but is a byproduct of lead-zinc mines, copper mines, and gold mines. That is, mine owners are mainly mining copper, lead-zinc, and gold, with silver just coming along for the ride.
This is very awkward.
When silver prices rise, mine owners are certainly happy. But they won't immediately open a new copper mine just because silver prices rise.
Copper mines have copper mine investment cycles, lead-zinc mines have lead-zinc market logic. From exploration, approval, financing, construction to actual production, it usually takes many years.
You shout in the market: "Silver prices have risen, come mine silver!" The mine owner might shrug and say: "I mine copper, silver is just a byproduct. I'm happy if there are more rabbits, but I can't rebuild a prairie just for rabbits."
Therefore, the elasticity of the silver supply side is very poor. Price increases do not translate to production expansion, or the transmission is very slow.
What about recycling? It can indeed help. Old jewelry, silverware, industrial waste, e-waste can all recycle some silver.
High silver prices will stimulate recycling, that's correct.
But recycling also has a ceiling. The premise for recycling is that things have reached the end of their service life. The silver in photovoltaic panels has to wait until the panels have served for 20-30 years before there's a chance to recycle. Silver in electronic products is even more dispersed; there may be only a few tenths of a gram of silver in a mobile phone, and collection, disassembly, and refining all cost money.
So recycling can relieve pressure but cannot fundamentally solve the problem. Mine production is rigid, recycling has a limit, and the final buffer is inventory.
And inventory is being eaten up year by year.
At this point, you might say: "Aren't there still a lot of silver in the London and New York vaults?"
Yes, there is.
Data released by the London Bullion Market Association shows: by the end of April 2026, there were still 27,454 tons of silver in London vaults.
This number sounds large, piles of silver bars look like there's absolutely no shortage.
But the problem is, not all this silver is "active silver".
What is "active silver"?
It means it can be lent out at any time, delivered at any time, and circulated in the market at any time.
Much of the silver, although physically in London vaults, already has legal owners. Index stocks occupy a portion, physical trusts occupy a portion, and structured products also occupy a portion. When you buy silver index stocks, the fund company needs corresponding physical silver as backing. This batch of silver is still in the vault, but it doesn't mean others can borrow it away just because they want to.
According to estimates by Metals Focus: by the end of September 2025, the proportion of London inventory truly not bound by exchange-traded products and that could support market liquidity had once dropped to about 17%. By the end of March 2026, this ratio had recovered to about 28%.
Although liquidity has improved, think carefully: 28%... it doesn't sound particularly generous either.
This is like having 1,000 tons of water in the tower, but 800 tons have been reserved for hospitals, schools, and fire systems. What's left for daily residential use is only a small portion. The total number of the tower looks good, but it doesn't mean your tap has real water pressure.
Good inventory numbers don't mean good liquidity. This is a difference that many people still don't understand.
What's more troublesome is: silver is not the first precious metal to take this path.
A similar story happened with palladium.
Many people are not familiar with palladium. It looks a bit like platinum, silvery-white, and one of its main uses is automotive exhaust catalysts. The catalytic converter in your car may use palladium.
Palladium and silver have an important common point—they are both metals highly dependent on byproduct supply. Global palladium mainly comes from nickel mines and platinum group metal mines in Russia and South Africa.
If you want to produce more palladium, it's not that when palladium prices rise, mines immediately go all out. You have to look at the capacity of nickel mines and platinum group metal mines, look at automotive industry demand, and look at mine investment cycles.
After 2016, as global vehicle emission standards continued to tighten, palladium demand increased significantly. But mine expansion couldn't keep up, spot markets became increasingly tight, and prices surged. Palladium rose from a few hundred dollars per ounce to several thousand dollars per ounce in just a few years. It's not that the world suddenly ran out of goods, but that goods that could be immediately circulated and delivered in the market were insufficient.
This is the most可怕 thing about byproduct metals. What it lacks is not concept, but liquidity.
The place where silver is most like palladium now is also here.
Next, let's see: who is frantically drawing water from the other end of this pipe?
I divide it into three straws.
The first straw, India.
Indians' love for silver is cultural. Weddings require silver, religious festivals require silver, and family savings also prefer silver.
In the past, when Indians bought silver, it was more for jewelry and silverware, which they would lock in cabinets and pass to daughters for weddings, who would then pass to granddaughters.
This batch of silver is largely "dead inventory" in economic terms, not participating much in market circulation.
But the situation has changed in the past two years.
From April to December 2025, India's silver import value reached $7.77 billion, a year-on-year surge of nearly 129%. This is not just buying a little more, this is a doubling-level change.
More importantly: India's new central bank regulations took effect from April 1, 2026, allowing banks and financial institutions to accept silver jewelry and silver coins as loan collateral.
Note, not silver bars, not index stocks, but qualified silver jewelry and silver coins.
This change is important!
In the past, Indian families bought silver more for traditional savings and cultural consumption. Now silver can formally enter the mortgage loan system, adding a financial attribute. A family takes silver jewelry to the bank as collateral, gets cash flow, and silver stays in the financial system. This means that in India, silver is no longer just a dowry and festival gift; it is becoming a more formal folk financial asset.
This straw is not temporary, it's institutional.
The second straw, China.
China's relationship with silver is more complex.
China is a global important center for silver processing and manufacturing—silver powder, silver paste, silver contacts, a large number of industrial silver products are related to China's manufacturing. In the past, the global market saw China as an important processing and supply end in the silver industry chain.
But now, China's domestic demand is also strengthening.
Photovoltaics need silver paste, electric vehicle battery management systems, charging interfaces, control systems need silver, energy storage and power electronic components also need silver, and 5G and high-frequency communication equipment also rely on these high-conductivity materials.
When these industrial chains explode simultaneously in China, China will no longer just be a water faucet supplying to the outside world; it itself also starts to absorb water on a larger scale.
So what the market worries about is not whether China has silver, but whether China's production capacity and inventory will continue to flow to the global market as stably as in the past.
As long as this expectation changes, the pressure in the pipe will change.
The third straw, investors.
This straw is most familiar to many friends. In 2026, physical investment demand such as gold coins and silver bars is expected to grow significantly.
The reason is very simple—gold is too expensive. Gold is already in the thousands of dollars per ounce, ordinary people can't buy much. The threshold for silver is lower, tens of dollars per ounce, a few thousand yuan can buy a silver bar, making it psychologically easier to start.
Moreover, silver has a very clever narrative: it has both the safe-haven attribute of precious metals and the support of industrial demand. When investors hear this, they think, "That's great, it's like gold but also like new energy materials." So when safe-haven sentiment arises, silver bars and coins start to lie in safes.
The problem is: once investment silver enters a safe, it's not easy to come out in the short term. Unless the price falls to what holders can't bear, or rises to what they are willing to cash out, this batch of silver will also become dead inventory.
When you look at these three straws together: India is systematically absorbing silver, China's industrial domestic demand is absorbing silver, and investors are hoarding silver.
The water is still that water, but the straws are getting more and more numerous, thicker and thicker, so the water level in the cup naturally becomes unstable.
This is the straw effect of silver.
A single straw may not be fatal: India buys more, it's okay, because they used to buy too; China's domestic demand is larger, it doesn't matter, the industrial chain is still upgrading rapidly; investors hoard silver, it doesn't matter, they will still sell when the emotion passes.
But when three straws draw water at the same time, who will give in first?
The answer is: in the short term, no one may give in.
The three pairs of hands pinning silver are not giving in, and the market starts to suffocate.
Speaking of which, you might ask: "Isn't photovoltaics the biggest consumer of silver? Isn't photovoltaics saving silver now? Is silver doomed?"
This is a good question.
Photovoltaics is indeed an important source of silver demand growth in recent years. Those thin conductive wires on the surface of solar cells often rely on silver paste.
But when silver prices rise too sharply, photovoltaic companies can't stand it either. Photovoltaic modules have always been a low-margin industry, and price competition has been fierce in recent years, with profits as thin as paper. When silver paste costs rise, companies of course want to find ways to save silver.
So now you can see the entire photovoltaic industry is accelerating to find alternatives.
Such as silver-coated copper—copper particles coated with a thin layer of silver, trying to achieve similar performance with less silver. There's also copper plating, low-consumption paste, and silver reduction schemes for different battery structures.
LONGi Green Energy also announced advancing copper-based metallization solutions based on BC battery routes, planning to mass-produce related products in the second quarter of 2026.
What does this show?
It's not that silver is no longer important, but that the industry chain has to save itself when silver becomes too expensive.
When will an industry frantically seek alternatives? When the raw material cost is too high to bear.
When oil was expensive, the world frantically developed new energy. But after so many years of new energy development, has oil demand disappeared immediately? No. Because substitution is a long road, and new demands continue to emerge.
Silver is the same. Photovoltaics is saving silver, that's a fact. But AI data centers, electric vehicles, energy storage, power equipment, electronic components are increasing silver usage. The World Silver Association also mentioned that data centers, AI-related technologies, and the automotive industry will continue to support silver consumption in various industrial terminals.
Think about it, AI data centers don't just need GPUs. GPUs need to be plugged into servers, servers need motherboards, interfaces, connectors, data centers need power supply, switchgear, relays, high-voltage contacts. Silver is one of the most conductive metals, and in many places requiring high-reliability conductivity, copper can replace part of it, but not all.
Electric vehicles are the same. Battery management systems, charging interfaces, control units, various sensors and connectors may all use silver. The usage per part may not be large, but the problem is that there are too many of them. Every car, every circuit board, every connector in the world eats a little bit of silver. Each place is just a few tenths of a gram, but together they form a big pool.
This is the most strange place about silver. It's not as conspicuous as oil, not as high-profile as chips, nor as political as rare earths. It quietly lies on circuit boards, photovoltaic boards, switch contacts. You can't see it, but the industrial system can't do without it.
More importantly: in November 2025, the United States added silver to the final list of critical minerals.
Many people didn't notice this, but it's very important. Critical minerals are not an ordinary list; they represent the US government's view that this material is important to economic and national security, and if the supply chain has problems, it may affect key industries. In the past, this list included familiar strategic resources like rare earths, lithium, cobalt, and graphite. Now, silver is on it too.
This doesn't mean the US will buy up silver tomorrow, nor does it mean it will immediately impose tariffs on silver. But it means that silver has formally entered the policy field of vision from an ordinary precious metal.
Once it enters the policy field of vision, things become complicated.
In the future, it may affect the approval priority of domestic mine projects, may affect policy support for recycling and smelting, and may also affect trade reviews and tariff discussions.
Especially since the US itself is highly dependent on silver imports. US Geological Survey data shows: in 2025, the US net import dependency for silver was about 77%, with main import sources including Mexico, Canada, Chile, and Turkey, with Mexico being one of the most important.
You read that right—it's Mexico, not China.
This raises a question, if in the future US-Mexico trade relations change, or silver is included in larger trade negotiations, will the US silver supply chain become more vulnerable. If in the future the US uses tools like Section 232 to review silver imports, will global silver trade flows be reshuffled.
This doesn't mean it will definitely happen, but it means silver has added a variable, a policy variable.
When a metal simultaneously meets three conditions, its price becomes difficult to explain only by traditional supply and demand models.
The first condition, factories need it.
The second condition, investors hoard it.
The third condition, governments include it in strategic resource vision.
Silver now meets all three conditions.
So back to the beginning water tower and water pipe story. Is there water in the water tower?
Yes, the world's known economic reserves are about 610,000 tons, with a reserve-to-production ratio of about 23.5 years. The silver on earth is not gone tomorrow.
But what about the water pipe? The water pipe is getting thinner, getting clogged, and may be affected by various policy valves.
The thinner the water pipe, the more unstable the water pressure. The more unstable the water pressure, the more likely the tap is to spray fiercely or stop flowing at any time.
This is the underlying reason why silver surged from $121 and then fell back to the $75 to $77 range. It's not simply a bubble, nor is it manipulation, nor is silver suddenly worthless. It's that the liquidity of this market has become very fragile.
Of course, this absolutely doesn't mean you should rush in blindly now.
Silver fluctuates too much. From the high point in late January to late May, the drop can reach over 30%. If you use half your family's savings to buy silver bars, and encounter a 20% drop in a month, can you bear it? If you bought 10 silver bars at the highest point, your paper loss might already be equivalent to more than three silver bars now. This is not a joke, this is a real gold and silver pullback.
So I don't make buy/sell suggestions, nor do I tell you whether you should chase the trend. But I hope you remember the three numbers from today's episode.
The first number, 23.5 years. This is roughly the reserve-to-production ratio of silver. There is still silver underground, don't be scared by the "depleted in ten years" claim.
The second number, 46.3 million ounces. This is the structural shortage expected in the 2026 silver market. It may sound like only a small part of total demand, but in a market with thin free-circulating inventory, such a gap is enough to cause prices and lease rates to fluctuate violently.
The third number, 129%. This is the year-on-year increase in India's silver import value from April to December 2025. A market of over a billion people is turning silver from traditional jewelry and family savings to a more formal mortgage financing system. This straw has just started to thicken.
These three numbers together show one thing: the problem with silver is not the lack of silver, but that silver is becoming increasingly difficult to flow to the people who need it most.
If you pay attention to new energy, AI infrastructure, electric vehicles, and global supply chain restructuring, this water pipe is worth watching. Not because it will definitely rise, but because the thinner, more clogged, and more fragile the water pipe, the more likely it is to suddenly burst when the market is least paying attention.
When that happens, it's not just silver prices that will be affected, but also the cost of photovoltaic modules, electric vehicle components, connectors and silver contacts in data centers, and that layer of thin, irreplaceable silver on every circuit board.
Ask a factory owner if silver is important. He might say, no, the usage is small. But try cutting off the silver supply, and many production lines will start to have headaches the next day.
Silver is such a metal. No one discusses it every day, but everyone indirectly uses it. It doesn't stand on the center stage, but hides behind every lamp. It's not the protagonist, but without it, many shows can't go on.
Therefore, what truly deserves attention about silver is not whether it will hit new highs tomorrow, but that the pipe behind it is getting thinner.
The problem with the water pipe has never just been a problem with water.
