Silver refreshes 12-year high, precious metals market sees new focus
Entering July 2026, the global precious metals market shows significant divergence: gold trades narrowly around $2,450/oz after earlier corrections, while silver breaks out strongly, with London spot prices hitting $38.25/oz this week, a 12-year high since April 2012. As of July 25 close, silver settled at $37.95/oz, up 5.6% weekly and over 32% YTD, far outperforming gold.
Market analysts point to explosive growth in industrial demand, especially from photovoltaic (PV) sector, as key driver. According to the latest London Bullion Market Association (LBMA) data, global silver physical deliveries in H1 2026 reached 32,000 tonnes, up 18% YoY, with silver used in PV rising from 28% in 2023 to 35%, becoming the main growth engine.
PV & New Energy: Dual engines of silver demand
Amid global energy transition, PV installations continue to exceed expectations. The International Energy Agency (IEA) forecasts global new PV capacity could exceed 550 GW in 2026, up 15% from 2025. Silver, as core material for PV cell silver paste, sees consumption correlated with capacity. Each GW of PV modules consumes about 20 tonnes of silver, so PV alone used about 11,200 tonnes in H1, up 25% YoY.
Beyond PV, electric vehicles (EVs) and 5G telecom also boost demand. Each EV contains 25-50g of silver for connectors and silver-plated parts. Global EV sales exceeded 8 million units in H1 2026, driving about 300 tonnes of silver consumption, up 40% YoY. Additionally, 5G base station construction increases silver usage for high-frequency electronic components.
"Silver is rapidly shifting from a safe-haven asset to an industrial metal," said Chen Weilun, analyst at Singapore precious metals dealer SilverEdge. "Industrial demand now accounts for over 60% of total silver demand, while mine supply growth is slow, widening the supply-demand gap."
Supply bottlenecks: Mine output stalls, recovery growth limited
In stark contrast to robust demand, supply growth is weak. Major silver miners' Q2 2026 production reports show global mine output of about 15,000 tonnes in H1, up only 1.2% YoY due to declining ore grades, strikes, and stricter environmental regulations. Meanwhile, lead-zinc output (key silver byproduct) also sees no significant increase.
For recycled silver, despite progress in recycling decommissioned PV panels and e-waste, technical bottlenecks and cost constraints limit growth to an estimated 3% in 2026, reaching 6,000 tonnes, insufficient to close the supply gap. The Silver Institute's mid-July report expects a global silver supply deficit of about 3,500 tonnes in 2026, the largest in a decade.
Financial market sentiment: ETF holdings hit record, speculative inflows surge
Supply-demand changes quickly reflect in financial markets. The world's largest silver ETF, iShares Silver Trust (SLV), saw holdings hit 21,000 tonnes on July 24, a record high, with net inflows over $1.5 billion in July. Meanwhile, CFTC data shows COMEX silver futures speculative net long positions rose to 85,000 contracts as of July 20, the highest since February 2021.
"Silver is attracting a lot of hedge funds and institutional investors who see it as a rare asset combining industrial growth and monetary hedge," said Jonathan Taylor, precious metals strategist at UBS. "With rising global inflation expectations, a weakening dollar, and accelerating energy transition, silver is more resilient than gold. We've raised our year-end 2026 silver target to $45/oz."
Institutional views: Long-term bull market confirmed, but short-term profit-taking risk
Amid bullish sentiment, some warn of short-term risks. Silver has risen about 25% in less than three months, with technical indicators showing overbought conditions. On July 25, after hitting $38.25, silver quickly retreated and closed below $38, indicating increased profit-taking pressure. Morgan Stanley's latest report notes silver may face a correction of up to 10% in the short term, but long-term supply-demand structure supports further upside; it advises buying on dips.
Looking ahead, market focus shifts to PV production data, major central bank policies, and US economic data for industrial demand signals. If global manufacturing PMI continues to improve, silver could challenge $45; conversely, if recession fears rise, silver may pull back to around $35 for support.
Overall, silver's unique "dual nature" is making it the star of the 2026 precious metals market. For Asia-Pacific mining investors, focusing on volatility opportunities in silver mining stocks and related ETFs could yield excess returns.
