Gold fell 30%, silver 53%: Why silver could be the bigger winner in near run

Gold, silver rally: The sharp correction in precious metals has reset valuations and positioning, but Monarch PMS believes silver could offer greater upside from here. While gold’s structural case remains intact, silver combines monetary demand with a persistent physical deficit and a tightly leveraged market, creating the potential for sharper gains when sentiment turns.

On Wednesday, gold and silver prices slipped in early trade as investors assessed geopolitical tensions, higher crude oil prices and the outlook for US interest rates. On COMEX, gold fell 0.41% to $4,420.80 an ounce, while silver declined 0.21% to $66.86. The weakness came as Brent crude rose 1.6% to $99.49 a barrel, while WTI gained 1.72% to $94.63, extending its rally to a fourth session. 

Silver’s deficit is getting wider

Silver is entering its sixth consecutive year of physical deficit, with the 2026 shortfall projected at 46.3 million ounces, wider than the 40.3 million-ounce deficit in 2025. Since 2021, a cumulative 762 million ounces has been drawn from above-ground stocks.

The supply response is also unusually slow. Global mine production has remained broadly flat at around 830-850 million ounces a year since 2015, while most silver is produced as a by-product of copper, lead and zinc mining. New mines can take close to a decade to move from permitting to production, meaning higher prices cannot quickly bring additional supply to the market.

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This creates a structural constraint that gold does not face to the same degree.

Solar demand is falling—but the deficit remains

One of the biggest concerns for silver has been weaker demand from solar panels. Photovoltaic silver consumption is forecast to fall 19% in 2026 to around 151 million ounces, following a 6% decline in 2025.

However, Monarch PMS argues that the decline is largely due to “thrifting”—using less silver per solar cell—rather than outright substitution. The report notes that reducing silver loading has a practical floor because excessive reductions can affect cell efficiency and reliability. Meanwhile, copper substitution in the dominant TOPCon technology is not expected to become commercially widespread until 2028-30.

More importantly, the deficit has continued to widen even after the largest recorded fall in photovoltaic demand, highlighting the strength of the supply-side constraint.

5.6x paper leverage could amplify the next move

Silver’s market structure is another reason Monarch sees asymmetric upside. COMEX registered inventories stand at about 96 million ounces, with coverage of only 17.8% against outstanding paper claims and estimated paper leverage of around 5.6x.

That leverage works both ways. It contributed to silver’s 53% correction from its January peak of $121.64 an ounce to around $57.6 in June. But when physical availability tightens and investment demand returns, the same structure can accelerate an upside move.

Physical investment demand is forecast to rise 20% to 227 million ounces in 2026, while US retail demand is expected to rebound 57%.

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Silver also looks cheaper than gold

Monarch’s valuation framework puts silver’s modelled range at $54-$77 an ounce, with a midpoint of $65. At $61.7 on August 6, silver was about 6% below that midpoint. Gold, in contrast, was about 8% above its $3,922 midpoint at $4,242.

That gives silver a potentially more attractive risk-reward profile.

The caveat is volatility: silver can fall harder and faster than gold. But after the correction has flushed out leverage and reset the gold-silver ratio from 46x to about 69x, Monarch believes silver may be better positioned for the next leg of the precious-metals rally.

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