Silver rallies past $80 as supply deficits reshape market outlook

The precious metal recently hit a nine-week high near $87, holding most of those gains despite minor profit-taking that left spot silver at $84.99 on Tuesday. This price action defies the conventional logic that high inflation and rising interest rates should suppress non-yielding assets. Instead, the market is bracing for a sixth consecutive annual supply deficit, projected by The Silver Institute and Metals Focus to reach 43 million ounces.

Barbara Lambrecht, a commodity analyst at Commerzbank, points to the energy crisis stemming from the war in Iran as a primary catalyst for this squeeze. Because silver is largely a by-product of base metal mining, reduced production in the base metals sector is tightening silver supply further. Simon-Peter Massabni, head of business development at XS.com, views this not as a temporary fluctuation but as a fundamental shift in how the metal is valued. He argues that silver is moving out of gold’s shadow, driven by investors who see its dual utility as both a store of value and a critical industrial resource. As sovereign debt levels rise and geopolitical instability persists, this rare combination is increasingly attracting capital, suggesting the current rally may have room to run despite broader economic headwinds.