Silver industrial demand surges, photovoltaic silver use hits record high, silver price breaks through $40 mark

On July 28, 2026, the international spot silver price strongly broke through the $40/oz mark during Asian trading hours, reaching a high of $40.28/oz, a near two-year high since June 2024. Market analysts pointed out that the core driving force behind this silver rally is the explosion in industrial demand, especially the consumption of silver by the photovoltaic industry, which is growing at a faster-than-expected pace.

Photovoltaic Silver Use: New Engine of Silver Demand

According to the latest "2026 Silver Supply and Demand Report" by the Silver Institute, global silver industrial demand surged 18% year-on-year in the first half of 2026, with photovoltaic silver consumption reaching 230 million ounces, accounting for 42% of total industrial demand. Full-year photovoltaic silver use is expected to exceed 450 million ounces, up 32% from 2025. This growth rate far exceeds the market consensus of 15%-20%.

Silver paste, a key material for solar cell electrodes, has a usage highly positively correlated with cell production. As the global energy transition accelerates, especially with major economies like China, the US, and India significantly raising photovoltaic installation targets, the silver industrial demand curve has steepened. According to data from the China Photovoltaic Industry Association, China's photovoltaic module output reached 250GW in H1 2026, a 45% year-on-year increase, driving silver paste consumption up by about 40%.

Supply Bottlenecks Highlighted, Supply-Demand Gap Widens

In contrast to the booming demand, silver supply growth is sluggish. The top five silver-producing countries (Mexico, Peru, China, Russia, Poland) saw a combined mined silver output increase of only 1.2% in H1. Among them, Mexico's output fell 3% year-on-year due to aging mines and labor disputes; some lead-zinc mine by-product silver output in Peru declined due to depressed metal prices.

The Silver Institute expects a supply-demand deficit of about 30 million ounces in the global silver market in 2026, the largest in five years. This deficit is being continuously drawn from above-ground inventories, with LBMA silver stocks falling to 295,000 tonnes, the lowest since 2020. Rapid inventory depletion further strengthens price upward elasticity.

Institutional Views: Silver Price May Challenge All-Time High

Several investment banks have recently raised their silver price forecasts. Goldman Sachs raised its year-end 2026 target to $45/oz, citing the continued expansion of photovoltaic silver use and the Gold/Silver Ratio currently at a historical high of 85, with a need for mean reversion. If the ratio falls back to around 70 (close to the decade average), with gold assumed at $2,850, silver could rise to $40.7; if gold strengthens further, it is only a matter of time before silver breaks the historical high of $50.

JPMorgan pointed out in its latest report that silver ETF holdings increased by about 500 tonnes in the last week of July, showing significantly increased willingness to allocate to silver. Meanwhile, platinum prices continue to rise due to South Africa's power shortage, also driving substitution demand for silver.

Investment Beginners Must Know: Silver's "Dual Nature"

For ordinary investors, silver has both precious metal and industrial metal properties. When the global economy recovers and industrial activity is active, silver often outperforms gold; while in risk-off sentiment, silver's gains often lag behind gold. Currently, both have positive factors: on one hand, expectations of Fed rate cuts are rising, with real interest rates falling supporting the overall valuation of precious metals; on the other hand, photovoltaic new energy policies are being intensively implemented, and the industrial demand story is just beginning.

However, silver price volatility is much higher than gold, and intraday swings of over 20% are not uncommon. Beginner investors can participate through silver ETFs (such as SLV), futures contracts, or physical silver bars. It is recommended to adopt a dollar-cost averaging or phased entry strategy to avoid chasing rallies and selling off.

Outlook: Focus on August PV Installation Data and Fed Rate Decision

In the short term, the silver price may face profit-taking pressure at the $40 round number. However, entering August, China, Europe, and the US will successively release July PV installation data. If high growth continues, silver could hold above $40 and challenge $42. In addition, the Fed's July FOMC decision will be announced early on August 1. If it delivers a dovish signal, it will further boost precious metals market sentiment.

In the long term, the structure of silver industrial demand is undergoing irreversible changes. Although the per-unit consumption of silver paste is declining with the promotion of HJT and other efficient cell technologies, the exponential growth in total installed capacity is sufficient to offset the reduction in unit consumption. The Silver Institute expects photovoltaic silver use to reach 600 million ounces by 2030, when total annual silver demand will exceed 1.2 billion ounces, while mined silver output is expected to only reach 900 million ounces, with the deficit potentially several times the current size. This fundamental logic is the core supporting long-term silver strength.

(This article does not constitute investment advice. The market carries risks; invest with caution.)