Silver’s $70 Jump Masks a Six-Year Squeeze as Mexico’s $1.2 Billion Megaproject Lines Up
Published on 06/15/2026 at 10:06 | Redaktion boerse-global.de
A sudden détente between Washington and Tehran sent silver rocketing past $70 on Monday, but the rally is only one layer of a market contorted by structural scarcity, shifting industrial demand and a hawkish Federal Reserve debut. The geopolitical surprise – a peace deal due for signing in Switzerland on June 19 that guarantees free passage through the Strait of Hormuz – added more than 4% to the precious metal, lifting it from Friday’s close of $68.13 to roughly $70.80 an ounce. Oil prices slumped nearly 5% on the same news, a divergence that underscores silver’s dual identity as both a safe haven and an industrial commodity.
Yet beneath the headline move, the fundamental picture is tightening relentlessly. The Silver Institute projects 2026 will mark the sixth consecutive deficit year for the metal, with the market short an estimated 46.3 million ounces. Over the past five years, global inventories have been drained by 760 million ounces, a depletion that leaves little buffer against any fresh demand shock.
That deficit is precisely why mining companies are pouring capital into new supply. Discovery Silver posted revenue of $285 million for the start of its fiscal year, with operating profit surging 41% year-on-year. The company now holds liquidity – including credit lines – of nearly $635 million, a war chest earmarked for expanding output. The buying spree extends across the sector: on June 1, Glencore Canada’s Kidd Operations changed hands, a site expected to produce around 0.4 million ounces of silver by year-end, along with thousands of tonnes of zinc and copper as by-products.
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The real wildcard, however, lies in Mexico. The Cordero project is one of the largest undeveloped silver deposits on the planet. A feasibility study has confirmed 302 million ounces of reserves and a post-tax net present value of $1.2 billion. Management plans to extract 14 million ounces of payable silver annually over the first decade. CEO Tony Makuch, meanwhile, is targeting annual gold production of more than 500,000 ounces at the Timmins Camp, where silver comes as a highly profitable by-product. If these North American and Mexican deposits can be brought online quickly, the global supply balance could shift meaningfully.
But supply is only part of the equation. The biggest consumer of silver – the solar industry – is throttling back. In 2026, solar demand is forecast to drop 19% to 151 million ounces, not because fewer modules are being built, but because manufacturers are substituting expensive silver with copper and more efficient cell designs. That substitution tempers the bullish narrative of a perpetual deficit.
Monetary policy adds another layer of complexity. The Federal Reserve meets in mid-June for the first time under new chairman Kevin Warsh. US inflation is stuck at 4.2%, and producer prices surged 6.5% in May – numbers that leave the central bank little room to cut rates. A hawkish stance could cap silver’s upside, especially after weeks of downward pressure that left the metal’s 14-day relative strength index at 40.7, comfortably below overbought territory. To reach its 52-week high of $121.78, silver would still need to gain roughly 44%.
The next catalyst arrives on Wednesday, when the Fed publishes its updated rate outlook. Until then, the combination of a structural supply squeeze, a surprise peace dividend and cooling solar demand is keeping the market in a delicate, fast-moving equilibrium.
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