Why industrial demand from solar panels and data centres matters for silver, how the gold/silver ratio works, and why silver moves further than gold. Written on 28 May 2026.
Written on 28 May 2026. The demand figures are those published at the time. Prices have since changed.
Gold took most of the attention in early 2026. Silver's price is driven by a different mix of buyers, and the main difference is industry.
Supply and demand
The silver market has been in deficit for five years in a row. The Silver Institute's World Silver Survey 2026 put the 2025 shortfall at 40.3 million ounces. The cumulative shortfall since 2021 was 762.1 million ounces, met by drawing down stocks held above ground. Mine output in 2025 was 846.6 million ounces, so the five-year shortfall is close to a full year of mine supply.
Industry now uses more than half of all silver, mainly in electronics, solar panels and electrical components. Jewellery, silverware and investment make up the rest. Gold is held mostly as a store of value. Silver depends more on factory demand, so the economic cycle affects it more.
Solar panels
Industry data from solar manufacturers put the silver in each silicon cell at roughly 20 milligrams, about 70% less than a decade ago. Manufacturers have cut the amount per cell, but installations have grown faster, so total silver use in solar has kept rising. China alone installed 277 GW of solar capacity in 2024.
The cell designs that now dominate new production, TOPCon and heterojunction, still need silver for their electrical contacts. Manufacturers can reduce the amount further, but removing it entirely costs efficiency. That is why demand from solar does not fall much when the silver price rises.
Data centres
Data centres for artificial intelligence use silver in circuit-board plating and in the thermal materials that cool processors. The Silver Institute does not report this as a separate category. Industry estimates put AI-related use at 20 to 30 million ounces in 2026, from almost nothing in 2020.
That is small next to solar, but it is growing fast. Unlike solar, where manufacturers are cutting the silver content, cooling materials for newer chips tend to use more silver per unit.
The gold/silver ratio
The ratio is the gold price divided by the silver price. It shows how many ounces of silver buy one ounce of gold. Over the last fifty years it has averaged about 65.
A worked example with gold at $4,500:
Ratio | Silver price implied |
|---|---|
80 | $56.25 |
65 | $69.23 |
60 | $75.00 |
A falling ratio means silver is outperforming gold. A rising ratio means gold is outperforming silver. The ratio says nothing about whether either metal is cheap or expensive on its own, and it can stay far from its average for years.
The last comparable period of industrial and investment demand rising together was 2010 to 2011. Silver rose from about $18 to about $49 between mid-2010 and April 2011, much faster than gold. It then fell back sharply. Past cycles are a guide to how the ratio can move, not to what it will do next.
Supply risks
Mexico produces about a quarter of the world's mined silver. A disruption at a large Mexican mine, or a change in Chinese stockpiling, can move the price quickly because above-ground stocks have already been drawn down.
Why silver moves more than gold
Silver is a smaller and less liquid market than gold, and it reacts both to the factors that move gold and to industrial demand. When gold rises, silver has often risen further. When gold falls, silver has often fallen further.
That has a direct effect on risk. As at May 2026, silver could move 3% to 4% in a single session. On a $10,000 position, a 4% move is $400. The same $10,000 in gold on a day when gold moves 1.5% is $150. A position size that is comfortable in gold can be uncomfortable in silver.
The factors that could turn silver lower are the same ones that hit other metals: a stronger dollar, a recession that cuts factory demand, or a fall in gold.
CFDs use leverage. You can lose money quickly, and you can lose all of the money you deposit. Only trade with money you can afford to lose.
This is market commentary, not personal investment advice.