Silver’s $70 Ceiling: A Ceasefire Calms Markets But a 46-Million-Ounce Deficit Waits in the Wings
Published on 06/16/2026 at 08:27 | Redaktion boerse-global.de
The relief from a US-Iranian ceasefire has briefly lifted silver above $70 an ounce, but beneath the surface the metal’s fundamental story remains one of unprecedented physical scarcity. Monday’s early rally pushed July futures to $70.75, a 1.4% gain from Friday’s close, after the reopening of the Strait of Hormuz sent oil prices sliding and inflation expectations cooling. Yet the market’s attention is already pivoting from geopolitics to the debut of a new Fed chair and a structural supply gap that shows no sign of closing.
Kevin Warsh chairs his first Federal Open Market Committee meeting today, and the probability of a rate hold stands at 97%. The fed funds rate has been anchored in the 3.50% to 3.75% corridor for three consecutive meetings, and no change is expected. But with Warsh’s communication style still unknown, institutions are paring exposure to non-yielding assets like silver ahead of the decision, creating a headwind that operates independently of physical supply and demand.
The underlying supply picture is growing more acute. The World Silver Survey projects a deficit of 46.3 million ounces this year, the sixth straight annual shortfall and a sharp acceleration from 40.3 million ounces in 2025. Inventories are being drained to plug the gap: COMEX registered stocks have collapsed by 75% to roughly 80 million ounces, while LBMA vaults now hold about 27,450 tonnes of silver, a 20% decline from their all-time highs. The physical squeeze is being felt across the global warehousing network.
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On the demand side, a structural pivot is underway. The photovoltaic industry, long the engine of industrial silver consumption, is actively reducing its reliance on the metal. Leading producer Longi Green Energy is substituting silver with copper as silver paste accounts for 10% to 20% of solar cell costs — an easy target for cost-cutting amid overcapacity and thin margins. Analysts expect solar-related silver demand to fall by 19% this year, equivalent to 151 million ounces. That headwind is partly offset by surging demand from AI infrastructure, electric vehicles and electronics, all of which are running independently of central bank policy.
The broader macro backdrop provides a mixed signal. May’s consumer price index rose 4.2% year-on-year, the highest reading since April 2023, as energy price distortions from the Iran conflict rippled through the economy. Falling oil prices in the wake of the ceasefire have eased some inflation pressure, temporarily diminishing silver’s appeal as a hedge. But with the Strait of Hormuz reopened — it carries about 20% of global oil trade — the downward pressure on energy costs is likely to persist, giving the Fed more room to consider future rate cuts.
The gold-silver ratio currently sits at around 62, a level that historically signals relative undervaluation for the white metal. If Warsh strikes a dovish or neutral tone in his post-meeting press conference, capital could flow back into the silver market, shifting the focus back to the physical deficit. And with the shortfall expected to widen further in the coming quarters, the inventory drain that has already halved LBMA reserves and gutted COMEX stocks may ultimately prove a more powerful price driver than any single Fed meeting or peace deal.
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