The Silver Institute Strikes Again -- John Macintosh

NOTE: On Sunday afternoon I received an e-mail from two of my subscribers containing the silver commentary posted below -- and the first one through the door with it was Keith Bronstein.

I was able to track down the author of this work, who was kind enough to allow me to post it in the public domain, which is where I thought it belonged, as his in-depth analysis was more than worth sharing.

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. -- Ed

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My apologies for the length of this e-mail, but when you discover that a building is structurally unsound, it is no good replacing a few bricks. One cursory glance at the latest Silver Institute report on silver supply and demand suggested to me that the whole edifice is unstable, and needs a comprehensive analysis from the ground up.

On April 15 they published their annual report and, as in past, there is no shortage of glaring inconsistencies. To begin with, alongside physical mine production and recycling, they added 45 million ounces to last year's physical supply, and 10 million ounces to this year's supply through a category called hedging. Hedging is a financial construct, it is not part of the physical supply of a commodity. You cannot make a solar panel produce energy from hedged silver any more than you can grow a corn crop by buying corn futures. To quote the Silver Institute "options remain the preferred method of hedging." I am aware how an out of the money put or call can become valuable, but I didn't know that options could literally transform themselves into silver mines.

In their latest report they also retroactively increased mine and recycling supply for 2025 by a total of 29 million ounces. In other words, their magic wand conjured up a total of 84 million ounces of silver out of thin air from one year to the next.

However, these increases in supply pale in comparison with the decreases on the demand side, where they unleashed several full scale assaults.

Jewelry was one of the casualties that took a major hit.

In their 2025 report they had estimated jewelry demand at 196 million ounces. In the latest report they lowered the 2025 demand to 189 million ounces, and then they reduced this year's estimate for jewelry demand to just 159 million ounces, an amazing decrease of 37 million ounces from the 2025 report. Incredibly, jewelry demand is now down 32% from where it was in 2022, when it was 233 million ounces, and down 20% from where it was all the way back in 2005. Off the top of my head, I cannot think of many things that have lost 20% of their demand over the last 21 years, other than pet rocks and velour tracksuits.

Believe it or not, and with the Silver Institute, disbelief has to be suspended on a regular basis from a mighty high bridge, their combined jewelry and silverware usage of 193 million ounces now stands 25% below where it was in 1993, when demand was 257 million ounces. This huge reduction occurred over a 33 year time frame, when the global population increased by 48% and the GDP of the world rose by 450%.

Adding to this puzzle, the world's top buyer of silver jewelry and silverware, India, which accounts for roughly 40% of the world's silver jewelry demand, has seen a GDP increase over that period of 900%. Despite this dramatic increase, despite India's population rising by 550 million people, and despite India's eternal love affair with all things silver, the Silver Institute would have us believe that fewer silver rings, earrings, bracelets, necklaces, anklets and decorative and religious items are being purchased in India today than were purchased 33 years ago; a time when 60% of today's Indian current population had not been born. However, IBEF, the India Brand Equity Foundation estimates that from 2008 to 2017, which incorporates less than one third of the period covered above, India's fabrication of jewelry and silverware rose by 302%.

The Silver Institute estimates that jewelry fabrication in India fell from 112 million ounces in 2022 to 70 million ounces in 2025. They have not yet estimated Indian demand for 2026, but if it follows the 19% drop in global jewelry demand from 2025 to 2026, it will end up exactly at 50% below where it was in 2022. This is the kind of total wipe out in demand that occurred during the bubonic plague, not in the world's fastest growing large economy which is increasing at a pace of 6% per year.

You have to wonder if the Silver Institute ever checks out their own archives, like I do, to see if the current narrative makes any sense from a historical perspective. I am a pretty gullible sucker for wishy washy explanations, so I went looking for one. I even checked out the WHO website to see if they had declared silver jewelry a potential carcinogen. My AI search for melanoma outbreak among Indian women led me to a NIH study among Native Americans in Alaska, where the incidence was highest among males, so my searches have only made me increasingly puzzled.

Given all of the above, I found an article published last month by India's BW Businessworld quite interesting. It was called Silver Lining; Why India's Silver Jewelry Market Is Shining Despite Higher Prices -- and is linked here. The article started with these words; India's silver jewelry market is experiencing an unusual paradox; demand is rising even as prices rise.The article quotes ten CEOs and Directors of jewelry companies who all explain the phenomenon in similar terms.

One of them said this; 'as gold prices climb, Indian consumers look for more affordable options, yet they still have a cultural genetic code that compels them to stick with precious metals.'

I completely agree. I have been to India frequently, and precious metals are an integral part of their culture. With gold recently priced at 60 to 100 times higher than silver, it is an obvious and affordable alternative, particularly for the urban young.

In their latest report, the Silver Institute reduced 2026 global silverware demand to 30 million ounces. Back in 1999 it was 109 million ounces.

Meanwhile, silver production from recycled silverware has increased to 28 million ounces. The once huge gap between silverware demand and silverware recycling has collapsed to under 2 million ounces.

I predict with absolute certainty that in the 2027 Silver Institute's report, silver from recycled silverware will exceed the demand for silverware. In other words, silverware, just like hedging, will become a net supplier of silver. No wonder the mines are struggling with all this new competition.

As shocking as the demand drop for jewelry is, the lifetime achievement award for shedding the most demand on the Silver Institute hit list is their perennial favourite, the thrifty solar industry, the industry that squeezes more and more energy out of the sun by using less and less silver every single year. The Silver Institute has a history of retroactively lowering solar demand in dramatic fashion. In their 2023 report covering the years 2016 to 2022 total demand for that period was 736 million ounces. The following report in 2024 lowered total demand for the same 7 year period to 633 million ounces, a stunning 14% drop. Sometimes I wonder what happens to all that silver demand that is there one year and gone the next. Is it all buried in a giant communal pauper's grave?

And now, in the recent 2026 report they really went to town. Not only was 2025 solar demand lowered by 9 million ounces from 196 million, demand for the current year, 2026 ,was hammered to 151 million ounces, down 45 million from the demand they published last year.

Even for an outfit with an impeccable and longstanding track record of carpet bombing and spraying agent orange on anything that vaguely resembles demand, a drop of 23% in one year is a pretty audacious move, especially when global solar installations are increasing by 30% per annum.

Solar energy capacity installed in 2014 was 39 GW. According to Ember, one of hundreds of clean energy think tanks, in 2025 it was 636 GW, an increase of 1,630% since 2014. However, according to the Silver Institute, the silver incorporated in solar panels only rose by 314% over that time frame. Their "thrifting" argument would have us believe that in 12 years solar panels have become 520% more efficient at turning silver into energy, an achievement of quasi biblical proportions, almost like multiplying loaves of bread and fish five-fold, or turning water into wine.

It is even more miraculous given the changes in technology.

The newer technologies like TOPCon are indeed more efficient at converting the sun's energy, however, they use significantly more silver per watt to achieve that energy conversion.

In a recent article, ScienceDirect explained that while offering higher efficiencies, the latest solar panels, TOPCon and SHJ are also more silver intensive, as they use silver in both the front and rear panels, not just the front as in the older technology, PERC. Consequently, TOPCon and SHJ cells use 1.5 times and 2 times more silver per GW compared to PERC cells.

Science Direct quotes a study in which, if each technology had a 100% share of the market, silver demand in the solar industry would be 357 million ounces for PERC, 535 million ounces for TOPCon, and 830 million ounces for SHJ. Since the market is dominated by TOPCon panels, one could assume that the true number should be around 550 million ounces.

Recently, Solar Power World said the bifacial panels which now dominate 85% of the market use 150 mg of silver per cell. Using their calculations, Solar Power World implies that the 636 GW of installed capacity in 2026 would demand 610 million ounces.

According to yet another think tank, Progress in Photovoltaics, silver consumption in PERC modules was estimated to use 15 mg per watt. TOPCon 23.2 mg per watt, and SHJ 33.8 mg per watt. At an annual installation rate of 636 GW, that would equate to 305 million ounces, 470 million ounces, or 690 million ounces. Take your pick, mix and match at leisure, google your brains out, but none of your results will be anywhere near the paltry 151 million ounces in the latest Silver Institute report.

Then, once you have picked a number, add a minimum of 25% to it, because every year the number of solar panels fabricated are at least 25% higher than the panels installed, and all of the above is based on panels installed. In 2024 the fabrication rate was almost exactly double the installation rate.

So to sum up silver in the solar category.... 520% less silver used since 2014, roughly 1.5 times more silver per watt, and 25% at least on top of everything to cover the fabrication/installation gap. Forget the multiplication miracles in the New Testament, we are up to our necks in bakeries, and drowning in fish ponds.

Recently, Power Europe, the Solar Global Council, and many others have warned that the current pace of solar installation is not adequate to mitigate the effects of climate change. The solar Global Council is calling for 8 Terrawatts, that is 8,000GW to be installed by 2030. As of the end of 2025, all the solar panels that have ever been installed have a capacity of roughly 2.7 TW.

In other words, we need to pick up the pace, big time.

It seems that China is doing its best to oblige. For the month of March, China just announced that it exported an incredible 68 GW of solar panels. At that pace they would export 816 GW of solar panels in a year. If you look at the breakdown by country, some of the most populous countries like India, Nigeria and Ethiopia show huge increase in imports. No less than 50 countries imported a record amount in the month. No wonder the price of silver in Shanghai is showing a constant 12% to 13% premium over the West. They need to get their hands on every ounce available, and indeed, China's silver imports are surging in 2026. In March they imported 27 million ounces, more than three times what they imported in March 2025. At this pace their yearly imports would account for 45% of all the silver that is forecasted to be mined outside of China this year. Since China's refines more than 60% of the world's silver, and since silver exports from China have effectively been cut off, this leaves slim to no pickings for everyone else.

I strongly suspect that China, unlike the rest of the world, does not rely on data from the Silver Institute.

Not surprisingly, total silver stocks at the Comex have collapsed from 469 million ounces at the beginning of the year to 315 million ounces. At this rate there will be zero stocks come October.

This is what happens when supply is constantly running below demand, and when a commodity has been fundamentally mispriced for ages. No wonder COMEX introduced a 100 ounce silver contract, down from 5,000 ounces. I suspect not before long they will be offering a 1 gram contact, followed by a 1 mg contract, a 1 microgram and perhaps even a 0.1 nano-gram contract. The fine print will say bring along your electron microscope when you take delivery.

It is hardly surprising that the world's pricing mechanism for silver is rapidly moving East to Asia. The Indian authorities recently announced that they will no longer use the London silver market as its benchmark. They announced that they will use their own internal pricing mechanism, since it will be "more reliable." No kidding. After decades of rigging it seems like the game is almost up, and that one day the aptly named London gold and silver "fix" will be out of the lucrative fixing game.

Over the years the Silver Institute has changed formats several times. Sometimes they itemize jewelry and silverware separately, sometimes they combine them. Sometimes photography is included in industrial use, other years it is not.

Going all the way back thirty years I examined their industrial demand for every year, in every report. I excluded photography and photo-voltaics (solar) from their industrial usage. By doing this I was able to look at the nuts and bolts of their base industrial demand.

In their 2019 report, which is the last time they published a supply/demand table for 2010, they estimated the 2010 industrial demand, excluding photography and solar, at 567 million ounces. In their most recent 2026 report, current industrial demand minus photography and solar is projected to be 489 million ounces, 78 million ounces below what it was 16 years ago.

So all this gibberish about silver being used in EV's, EV charging stations, wind farms, data centers, 5G stations, radars, storage batteries, drones and missiles, in electronic thermal management, in EMI, reflectivity and conductivity, and all this talk of an electronic revolution, going from analog to digital, all the headlines of silver being used in cellphones and computers, touch tone screens and sensors, silver being included in the USGS critical mineral list, China's ban on silver exports, silver used in water purification, silver in medical implants and pacemakers, and antimicrobial creams, all this talk of innovation and technology, is apparently nothing but a smokescreen of hogwash and hot air, because over a period of 16 years the Silver Institute's high priests have ordained from the pulpit that industrial demand for silver, excluding solar, has gone inexorably backwards, shedding 14%, while the world economy grew by 78%.

My apologies to my English teacher who told me to keep my sentences short and succinct, but for how many more years will we be subjected to nonsense that pretends the silver balance sheet is more or less in equilibrium, when in reality it is completely out of whack.

The Silver Institute has already proven, at least to themselves, that silver is no longer desired in jewelry. With industrial use on a glide path towards zero, some may wonder how we shall dispose of the stuff. Garbage collectors are getting increasingly finicky these days, and more and more stuff is being turned away from landfills.

However, the United States Geological Survey, USGS, does not appear to have received the news that industrial demand is drying up. In a June 2025 report entitled Key Minerals in Data Centers, they estimated that just the server boards and circuitry of data centers consumed 64% of U.S. silver imports in 2025, which equates to 167 million ounces for the U.S. data centers alone and implies a global data center demand of around 380 million ounces in 2025, and on its way to a significantly higher demand in 2026.

If you deduct the implied global data center demand in the USGS report from the 2026 Silver Institute's industrial demand base, the remaining industries have 109 million ounces to share among themselves, compared to 530 million available back in 2007, when many of these industries were like mom and pop operations compared to today. It reminds me of when I witnessed a pride of 17 lions on a solitary kill. Dining etiquette on and in the carcass was temporarily put on hold, and in the end many had to go without. In commodity trading we call that a bidding war.

The war in the Mideast is obviously having a major impact on the price of energy. I believe it will also having a significant impact on the supply/demand for silver. Only 26 % of silver production comes from primary silver mines, down from 32% ten years ago. Around 55% of silver mine supply comes from mines that primarily produce copper, zinc and lead. Those mines need sulfuric acid to leach the metals from the ore body. Over 50% of global sulfur seaborne trade goes through the strait of Hormuz. The longer the strait is blocked, the more silver production will be curtailed.

Recently China, which accounted for 15% of global exports, banned sulfuric acid exports. Chile, which produces 25% of the world's copper, typically imports 1 million tons of sulfuric acid from China. Their mines have to compete with agriculture that is desperate for the fertilizer that comes from sulfur.

Consequently, the price of sulfuric acid has recently risen five-fold. It is hard to imagine how any byproduct of copper mines will see an increase in production this year. As it is, silver ore grades keep on falling. They have been falling by around 3% per year for many years. That is one of the reasons why silver mine production cannot respond to higher prices. Two of the largest silver miners, Fresnillo and First Majestic, have announced lower production in the first quarter of 2026, by 9% and 6%.

Meanwhile, capital expenditure in the neglected precious metals mining sector has hardly budged for decades, while environmental costs have skyrocketed. Despite the fact that Mexico, the world's largest silver producer, is seeing a 4% drop in production so far this year, and despite the curtailment of sulfuric acid supplies, the Silver Institute decided to raise its global mine production. They did this by retroactively increasing 2025 mine production from 835 million ounces to 847 million ounces. Their mine production of 846 million this year looks like it is down one million ounces, whereas it is actually up 11 million ounces from what it was a year ago in the 2025 report.

High energy prices are clearly impacting mine production of base and precious metals.

High energy prices are also increasing EV demand. EV sales in Europe exploded last month by 51%. China just announced that EV exports were a record in March. Samsung is still saying that their game changing solid state silver battery will be in full production next year. Their battery will use more than 20 times more silver than a current EV battery. Just 1.2 million cars with Samsung batteries would consume half the annual mine silver production.

One thing the war in the Mideast has made very clear. The reign of the tank and the aircraft carrier as we knew it, is over. The future belongs to drones and missiles. Anyone following the Russian/Ukraine war has seen how drone technology has evolved in a spectacular fashion in just a few years. At times over a thousand drones are employed on a daily basis between the two combatants.

Not since Genghis Khan put stirrups on horses has warfare been so disrupted. As drone technology has become more sophisticated the need for superior components has grown. While doing research into military drone technology, I was amazed by the variety of components that require silver in order to perform at their optimal capacity in critical conditions. Silver is indispensable in conductivity, in sensors and optical systems, thermal management and heat dissipation, radar, EMI shielding and signal integrity. Silver is also required in light weight silver zinc batteries and high current contacts for optical performance. Various sources estimate the silver content of military drones from a minimum of one ounce to 15 ounces per unit, depending on the size and sophistication of the drone, and every day they get more sophisticated.

What surprised me even more is the sheer volume of military drone manufacturing. Many sources claim that current global production runs into the millions of units annually.

The Christian Science Monitor estimates that as of late 2025, Ukraine and Russia were manufacturing about 4 million drones each, with China producing around 16 million. I would guess that if you add all other likely candidates, the global total would easily exceed 30 million. Even if each drone only contains 2 ounces of silver, total demand could currently require more than 60 million ounces, perhaps much more, from a demand base that barely existed five years ago. Indeed, military demand for silver might well be one of the fastest growing among many fast growing sectors.

What should be relatively clear by now for anyone who has managed to wade knee deep through the scattered remnants of the edifice I talked about, among all the piles of dissected dodgy data is this: the true annual silver deficits are not currently running between 40 and 50 million ounces as the Silver Institute would have us believe. They are many multiples higher, and they are baked into the cake for the foreseeable future. Regardless of price, supply cannot grow meaningfully for at least the next 5 to 7 years.

The main drivers of demand are largely price inelastic and are driven by the green agenda, geopolitical and economic warfare, as well as technology, none of which are willing or able to engage reverse gear. I am told that GDP is energy converted. I am also told that silver is the new oil. No matter how often the Silver Institute tries to bury the bodies in a pauper's grave, I still believe that silver is indeed the new oil, and therefore, indispensable.

Not only is it at the epicenter of a geopolitical struggle that weaponises resources such as rare earths and critical minerals by targeting their supply chains, it has become vital in our military, industrial and financial systems. It is strange that a metal whose only importance not long ago was in jewelry and photography, a metal so rare that one year's mine supply could be contained in a cube with each side only 44 feet long, should hold such a central place in today's economy and geopolitics. If this tiny cog in the wheel wobbles, it could derail the whole system. So what would happen if the price of silver responded to an unprecedented shortage by doing the unthinkable and going parabolic when demand completely overwhelms supply? The mines would be willing, but for many years, unable, and the demand, driven by unlimited financial resources and unbending ideologies would not be constrained in any meaningful way.

Ironically, silver's dirty little secret may well be this; the grimy industrial side of this unappreciated and, for many decades, unloved metal, may end up proving how uniquely precious it is.

John Macintosh

26 April 2026