Silver heads for sixth straight annual deficit with drawdown raising squeeze risk

[stack of shiny gold bars 3d illustration]
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The silver market faces a ‌sixth consecutive year of structural deficit, with 762M oz drawn from inventories since 2021, raising the risk of a renewed liquidity squeeze despite weaker demand expectations, the Silver Institute and consultancy Metals Focus said Wednesday.

The global silver market deficit is expected to widen to 46.3M oz ​in 2026 from 40.3M oz ​in 2025, even as ⁠total demand falls 2% due to weaker industrial and jewelry consumption, partly offset by stronger coin and bar demand, the research showed [https://www.reuters.com/legal/transactional/silver-faces-sixth-year-deficit-with-stock-drawdown-raising-squeeze-risks-2026-04-15/].

Liquidity has improved since last October's squeeze, as metal flowed back from the U.S., silver-backed ​exchange-traded products saw outflows, and Indian demand eased, "but risks of another liquidity squeeze this year remain," said Philip Newman, managing director at Metals Focus, which prepared the research for the ​Silver Institute.

Conditions for a silver squeeze will be created again, requiring further outflows from the U.S., if the price becomes more volatile and Indian demand gets active, especially coupled with inflows to ETPs storing their metal in London, Newman said.

Gold futures hovered ~$4,800/oz and silver at nearly $80/oz on Wednesday, as hopes for a fresh round of talks between the U.S. and Iran eased inflation concerns tied to higher energy prices.

"A softer dollar has supported the recovery; however, a sustained breakout likely depends on further constructive developments in the Middle East," Saxo Bank analysts said in a note.

Front-month Comex gold (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]) for April delivery finished down 0.5% to $4,800.00/oz, while front-month Comex April silver (XAGUSD:CUR [https://seekingalpha.com/symbol/XAGUSD:CUR]) ticked up 0.1% to $79.491/oz.

ETFs: (GLD [https://seekingalpha.com/symbol/GLD]), (GDX [https://seekingalpha.com/symbol/GDX]), (GDXJ [https://seekingalpha.com/symbol/GDXJ]), (IAU [https://seekingalpha.com/symbol/IAU]), (NUGT [https://seekingalpha.com/symbol/NUGT]), (PHYS [https://seekingalpha.com/symbol/PHYS]), (GLDM [https://seekingalpha.com/symbol/GLDM]), (AAAU [https://seekingalpha.com/symbol/AAAU]), (SGOL [https://seekingalpha.com/symbol/SGOL]), (DUST [https://seekingalpha.com/symbol/DUST]), (RING [https://seekingalpha.com/symbol/RING]), (BAR [https://seekingalpha.com/symbol/BAR]), (OUNZ [https://seekingalpha.com/symbol/OUNZ]), (SLV [https://seekingalpha.com/symbol/SLV]), (PSLV [https://seekingalpha.com/symbol/PSLV]), (SIVR [https://seekingalpha.com/symbol/SIVR]), (SIL [https://seekingalpha.com/symbol/SIL]), (SILJ [https://seekingalpha.com/symbol/SILJ])

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