Silver reached an all-time high of $121.64 on January 29. On May 14, it was trading at $84, having briefly climbed above $87 the day before on US-China tariff optimism before April CPI data retreated. The same day it fell below $85, UBS published a note explaining why the easy part of trading silver may already be over.
The revision is not a minor adjustment. It’s an 80% cut to the bank’s supply deficit estimate and changes the fundamental argument for holding silver for the remainder of 2026.
What UBS Changed Regarding Silver and Why the Deficit Review is Important
UBS analysts Wayne Gordon and Dominic Schnider released their revised outlook for silver on May 14, cutting the bank’s estimate of the global supply shortfall by 2026 from about 300 million ounces to 60 to 70 million ounces, according to Seeking Alpha. This is not a marginal revision. It is an 80% reduction in the history of shortages that has supported silver’s rally over the past few years.
More gold and silver
Price targets were lowered across the board alongside the deficit review. The end of Q2 2026 target was lowered from $100 to $85, the end of September target from $95 to $85, the year-end target from $85 to $80, and the March 2027 forecast from $85 to $75, according to the NAI 500. The bank’s base case now is that silver will “trade broadly sideways” for the remainder of the year.
USB says Three demand obstacles are reducing the silver deficit
The deficit revision is driven by three converging forces on the demand side, each of which has been amplified by the same factor: the rise in the price of silver earlier in the year.
The first is photovoltaic demand. Solar cells have been the largest source of incremental silver consumption in recent years, but rising silver paste costs per watt are accelerating manufacturers’ shift toward low-silver cell technologies. “By 2026, we expect weaker demand for PV due to elevated prices,” Gordon and Schnider wrote in the note, according to deVere Group. The second is demand for silverware and jewelry, where consumers have pulled back as prices remain elevated. The third is investment demand: Total known ETF holdings have fallen by nearly 70 million ounces, to about 794 million ounces, and net speculative futures positions have fallen back to just over 100 million ounces, according to Investing.com. Together, UBS estimates that these demand channels will reduce consumption by approximately 50 million ounces in 2026.
On the supply side, the outlook is modestly firmer. Mining production is expected to reach approximately 850 million ounces in 2026, putting additional pressure on the deficit. That combination of weaker demand and stronger supply is at the core of the revised view.
Silver’s rally has been based on a specific argument, and UBS just said that argument is considerably weaker than it wasMarrio/Getty Images
What Gold’s Trajectory Means for Silver Investors
UBS stopped short of issuing a completely bearish forecast. The reason is gold. The bank still expects gold prices to trend higher, calling it “an important anchor for silver.” The gold-silver ratio, which recently hovered in the 84-85 range, is expected to move toward 75-80 over time, according to the NAI 500. That implies silver may still have some room to close the gap with gold, but on a narrower and slower path than bulls had anticipated.
UBS’s handy trading recommendation reflects this ambivalence. Instead of recommending long positions, the bank prefers to sell the volatility to reap the carry over the next three months. Although implied volatility has fallen significantly from its peak earlier this year, when one-month observed volatility briefly approached 150% in February, it remains elevated relative to historical norms. That elevated volatility creates a premium that UBS believes can be captured without taking a directional view on price, Looking Alpha confirmed.
UBS Silver Note Key Figures for May 14:
Revised 2026 supply shortfall: 60 to 70 million ounces, down from the previous estimate of about 300 million ounces, a reduction of 80%, according to Investing.com.
Price Target Cuts: End of Q2 2026 from $100 to $85; late September from $95 to $85; New Year’s Eve from $85 to $80; March 2027 from $85 to $75, according to NAI 500.
Demand reduction estimate: approximately 50 million ounces in photovoltaics, jewelry and silverware, Investing.com confirmed.
ETF Holdings: Less than 70 million ounces to about 794 million ounces; net speculative futures positions just above 100 million ounces, Seeking Alpha noted.
Mining supply: approximately 850 million ounces expected in 2026; a modestly firmer context, according to deVere Group.
Silver all-time high: $121.64 on January 29, 2026; spot price of approximately $84 on May 14, according to GoldSilver.com.
Other banking forecasts: BofA 2026 averages $85.93, JPMorgan averages full year $81, Citigroup second half target $110, according to GoldSilver.com.
What the UBS call means for silver investors here
The most important implication of the UBS note is not new price targets. It is the change in the underlying thesis. For three years, the bullish case for silver was largely based on a structural supply deficit that was widening year after year. That deficit is now expected to be drastically reduced. If the main argument for holding silver was scarcity, that argument has weakened significantly in the short term.
The divergence between UBS and other banks is wide enough to give investors pause. Citigroup still sees silver reaching $110 in the second half of 2026. Bank of America projects a 2026 average of $85.93. JPMorgan’s annual average stands at $81. UBS’s year-end target is now $80. The spread between the most bullish and most cautious options on silver right now is over $30, reflecting genuine uncertainty over whether the demand destruction caused by this year’s price surge is temporary or structural.
UBS’s answer is that it is real enough to materially change the near-term outlook, even if gold provides a floor and the long-term industrial case for silver remains intact. For investors who believed the shortage story, the bank is basically saying: the story is not over, but the most compelling chapter may already be behind us.
Related: Analysts have a message for investors on falling silver prices
This story was originally published by TheStreet on May 16, 2026, where it first appeared in the Investments section. Add TheStreet as a preferred source by clicking here.
