Silver's Price Has Doubled. Its Supply Hasn't.

Key Takeaways

• A recurring theme in current silver commentary, argued by macro strategist Tavi Costa among others, is that the metal has roughly doubled over two years while mine production has stayed flat.
• Costa has characterised the June 2026 selloff as a “mathematically overdue” positioning unwind after a fast run, rather than a change in the underlying picture.
• Industry data providers point to a sixth straight annual deficit in 2026, with mine supply not keeping pace with demand.

Silver has roughly doubled over the past two years, and a recurring argument among precious-metals commentators is that the more interesting part of the move is what has not happened alongside it: a matching rise in supply. As of mid-July 2026, silver trades around A$83 an ounce (roughly US$58), off the near US$80 peak seen earlier in the year.

One of the more prominent voices on this is macro strategist Tavi Costa, a longtime precious-metals analyst. Costa argues silver's rerating is fundamentally a supply story, and that markets keep mistaking short-term price swings for changes in that story. His starting point is the production data: silver mine output is forecast to stay roughly flat in 2026 even though the price has doubled. According to Metals Focus, whose data underpins the Silver Institute's reporting, output is expected to hold broadly steady this year after just a 3% rise in 2025. In Costa's framing, a doubled price should pull new supply out of the ground, and it has not, because miners cannot simply turn on the taps. “You need discovery, scale, and infrastructure,” he has said, each of which takes years, not quarters.

Australia offers a useful illustration of the point Costa is making. The country is one of the world's larger silver producers, home to South32's Cannington mine in Queensland, one of the largest silver operations anywhere. Even so, domestic output is not surging to meet higher prices. A single major mine, or a single country, cannot close a global gap quickly, which is the kind of constraint the supply argument rests on.

Industry data providers link this slow supply to a persistent shortfall. The Silver Institute projects a sixth consecutive annual market deficit in 2026, with roughly 762 million ounces drawn from above-ground stocks since 2021 to cover the gap. On the demand side, the Institute notes more than half of annual silver consumption is industrial, spanning solar, electric vehicles, and electronics, sitting alongside silver's long history as a monetary metal.

Commentators such as Costa apply this lens to selloffs like the one in June 2026, when silver fell about 4% in a session after a firmer-than-expected message from the US Federal Reserve. Costa described that move as “mathematically overdue” rather than a break in the trend, noting silver mining stocks had run hard into the event, and that a fast run into a known date tends to unwind on the date. His broader argument is that commodities rarely peak while demand is rising and supply stays constrained. That is his interpretation, not a certainty.

It is worth stressing that none of this is a forecast, and the picture cuts both ways. Above-ground stocks still exist to be drawn down, recycling reached a 12-year high in 2025, and silver's volatility means the price can fall further from here regardless of the deficit. The supply argument that Costa and others make is a multi-year one and says little about any given week. What the current data appears to show, on the numbers those analysts cite, is that supply has not yet caught up to the price.

This article is general information only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial adviser before making investment decisions.