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[About the author: John was a trader in the grain pits on the floor of the CBOT for 40 years. He rarely traded silver...but its supply/demand fundamentals caught his eye a few years back -- and he's been following it closely ever since. The opinions stated in this article are entirely his own.]
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I heard recently that the metals analyst of a large bank had turned bearish on silver on account of demand destruction. The headline reads Silver Shortage to Flip to Surplus in 2027.
My response to that was: Where have they been all this time, don't they know that silver demand has been collapsing for 20 years?
The largest component of silver demand is its industrial use, and to get a handle on that demand over the years, we need to turn to the sole authority on silver statistics, the august Silver Institute, who have published global silver supply and demand records for over 50 years.
For the last couple of decades, photographic silver consumption has collapsed, and solar energy demand has exploded. To prevent those two opposing trends from obscuring core industrial use, photographic and solar usage need to be removed from the data. Unless otherwise stated, industrial demand below excludes photography and solar.
To get a true picture of the changes of demand over the last 30 years, one should take into account the growth in the world's population; in other words, demand needs to be calculated on a per capita basis.
In 1995 industrial consumption of silver was 295 million ounces. There were 5.7 billion people on the planet, so per capita usage of silver was 0.052 ounces per annum. Yes, that is a very small number, but keep in mind that three years of silver mine output would fit in the hold of a medium sized ocean going cargo vessel.
From 1995 to 2007 industrial demand increased to 544 million ounces.
As the world population in 2007 was 6.6 billion, per capita demand was 0.082 ounces, up 58% from 1995.
Over the same period, global GDP rose by around 90%, so although they were not joined at the hip, industrial silver demand and global GDP were advancing strongly together.
Little did anyone know at the time, but 2007 turned out to be the absolute high water mark for industrial silver consumption, both on an absolute and on per capita basis.
By the year 2019, industrial demand had fallen all the way to 419 million ounces. With a global population of 7.7 billion, the per capita ratio fell to 0.054 ounces, down 34% from 2007.
Surely, this incredible statistic has to be a worthy nominee for the Dodgy Data Hall of Fame;
Per capita industrial silver demand fell by 34% from 2007 to 2019, while global GDP rose by 52%.
Now silver and GDP were certainly not joined at the hip.
Imagine hip replacement surgery gone terribly wrong, with the patient left with one foot facing forward and the other pointing backwards. To walk a mile in those shoes would be a mighty stretch.
Here is another nominee from the Silver Institute: For 12 years, from 1995 to 2007, per capita industrial silver demand rose by 58%. For the following 12 years, from 2007 to 2019, it fell by 34%.
This one is going to be hard to beat.
It might even get the nod from the Nobel Prize Committee for Dodgy Sciences, and possibly a Bernie Madoff lifetime achievement award at the Oscars.
In the current Silver Institute report, industrial demand for 2025 is estimated at 470 million ounces, up from 419 million in 2019.
However, with the world population now at 8.3 billion, per capita demand is 0.057,unchanged from the low of 2019, and still 30% below where it was when everything started to fall apart in 2007, when the world of silver statistics lost its true calling and started chasing after fame and fortune.
So which man-made or natural catastrophe has befallen industrial silver demand since 2007?
Google searches for asteroids, nuclear war, bubonic plague, carcinogenic silver and silver linked to herpes outbreaks (these were random searches, nothing personal), everything turns up blank.
Here is another Dodgy Data nominee for the Silver Institute's Hall of Fame; As per capita silver consumption was cratering by 34% from 2007 to 2019, per capita copper demand rose by 17%. Had silver demand kept up with copper demand it would be 915 million ounces today, 445 million ounces higher than the Silver Institute's number.
All of this leaves me to ask again and again, what on earth happened to industrial silver demand at a time when there was a global shift from analog to digital, and the world was undergoing the great electrification of everything?
EV's and their charging stations, wind and 5G towers, military drones, silver oxide and silver zinc batteries, brazing and alloys, medical devices, robots, catalysts, sensors, water purification systems and gigantic data centers were all enjoying healthy if not unprecedented growth since 2007.
I would like to shed some light on an industry mentioned above that hardly existed in 2007, namely military drones.
The technology of military drones has advanced exponentially over the last several years.
The more sophisticated ones can no longer be jammed as they approach the target, as they then become autonomous. They are preprogrammed to choose between, say, a gas station or a refinery. For such critical decision making, only the most superior materials suffice.
For conductivity, optical and thermal management in such critical situations, nothing performs like silver.
The Wessex Mint has published an extensive analysis of military silver usage.
In that study they estimate that military drones consume between 3 and 16 ounces of silver each. The more sophisticated long range drones, that now have a range of 1200 miles obviously require the most. Ten ounces of silver in a $25,000 drone adds roughly 2% to the overall cost, probably not a deal breaker for any military budget.
Recently the Deputy Commander of NATO's Allied Air Command claimed that the Ukrainians are manufacturing "north of 5 million" military drones this year, up from just 5,000 in 2022. If that is true, then yearly global drone production is clearly over 10 million units and growing at an exponential rate.
At an average of 10 ounces of silver per drone, global consumption today would exceed 100 million ounces, up from almost zero 20 years ago.
If we remove military drones, which effectively did not exist in 2007, from the 2025 industrial base, and subtract those 100 million ounces from industrial silver demand, the remaining industries would only consume 370 million ounces between them, down from 544 million in 2007. The silver/per capita ratio would fall to a record low of 0.044 ounces.
This is obviously another candidate for that fabled hall; Stripping out military drones, which did not exist in 1995, per capita industrial silver consumption in 2026 is 15% below where it was in 1995. Over those three decades, global GDP grew by more than 400%.
Dodgy Data does not get much more monumental than this. We are way up into Mount Rushmore territory here.
What keeps happening to silver demand over the years brought back memories from Antarctica as I watched baby penguins on a slippery slope. It seems that silver demand is equally predisposed to repeat multiple face plants into what is effectively a partially frozen communal toilet.
Here is another all time doozie from the annals of Dodgy Statistics; From 1995 to 2007 industrial silver demand on a per capita basis increased by 58%. From 2007 to 2026, (excluding the world of military drones which effectively did not exist in 2007), it fell by 57%. Had they not being going in opposite directions, the demand for these two periods would be in perfect harmony.
Stripping out other industrial uses that either did not exist, or hardly existed in 1995, such as data centers, 5G towers, and EV charging stations, etc., the per capita ratio would continue to fall farther and farther behind the level it was at in 1995, but I don't think that I need to drive this exercise to the point of reductio ad absurdum, whereby per capita demand falls back to pre-Neanderthal levels, as I assume that by now you probably get the point, and the Hall of Fame waiting room is getting overcrowded.
None of this is rocket science.
Just look up the Silver Institute annual reports. Strip out photography and solar demand, and divide industrial usage by the global population.
And there you will have it all laid out before your eyes, and unfortunately, also your nose; because vast quantities of the Silver Institute data stinks to high heaven, like piles of partially digested guano rotting away in a colony of several hundred thousand penguins.
AI feedback will say that I am wrong, because all the data it sucks up on silver comes directly or indirectly from the same upstream source; the one and only source that has been polluting all silver statistics for decades. Silver Institute data in, Silver Institute data out.
Despite their incessant and preposterous lowballing of industrial silver demand, according to the Silver Institute's own estimates, the combined deficits of supply versus demand over the last 10 years exceed 1.3 billion ounces.
Had real industrial demand grown by only 1% per annum from 2007, far below the growth of previous years, the true cumulative deficit for 2026 would be 576 million ounces, not 76 million, and the cumulative deficit over the last ten years would not be 1.3 billion ounces, but in excess of 4.0 billion ounces, which equates to 5 years of mine supply. If you take into account the Silver Institute's equally dubious data for jewelry, solar energy and recycling, the deficits become truly eye popping.
The combination of silver ore grades falling by 2 to 3 % per year with decades of underinvestment in mining, means that the odds of a significant increase in supply over the next 5 years is close to zero.
When above ground stocks are diminished to a point where mine supply is needed to fill the gap, that supply will come up empty-handed. If the Samsung solid state silver battery that is meant to be mass produced within a year, turns out to be the game changer for EVs that it promises to be, then the several hundred million ounces of additional silver demand within a few years can only lead to massive demand destruction.
Absent the previously mentioned asteroids, etc, demand destruction can only occur through high prices. Best of luck trying to reduce data center or military silver demand through higher prices, even if those prices quadruple. The same goes for the billions of items in which the silver content is minuscule, like the transponder on your windshield that opens up the toll booth gate. The automotive industry alone consumes around 70 million ounces of silver, but at less than one ounce per vehicle, a quadrupling of the silver price would add only $150 to a $70,000 vehicle.
One day all these Hall of Fame dodgy statistics are going to run head first into the real world.
John Macintosh -- 15 November 2026
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