Core Viewpoint - Silver has shown resilience after a volatile period, currently trading around $69 to $70 per ounce, recovering from a low of $67.75 on March 26, following a peak of $72.60 on March 25 [1][3] Group 1: Market Dynamics - The recent pullback in silver prices was influenced by a strengthening US dollar and rising real Treasury yields, which increased the opportunity cost of holding silver [3] - The Federal Reserve's indication of only one expected rate cut in 2026 added pressure on silver prices, as fading rate cut expectations typically hinder silver's performance [3] Group 2: Recovery Factors - The recovery in silver prices reflects a reassertion of its long-term bullish outlook, supported by ongoing geopolitical tensions, particularly the Iran conflict, which has sustained safe-haven demand [4] - A slight decline in the dollar index provided silver with the necessary space to recover, while the fundamental supply and demand dynamics have remained unchanged [4] Group 3: Structural Supply and Demand - 2026 marks the sixth consecutive year of a global silver supply deficit, with mine supply projected to reach approximately 1.05 billion ounces, the highest in a decade, yet still lagging behind industrial demand [5] - The accumulated silver deficit from 2021 to 2025 is estimated at around 900 million ounces, leading to significantly depleted above-ground stockpiles [5] Group 4: Industrial Demand - Industrial applications now account for over half of total silver consumption, primarily driven by solar energy, which remains a key component in photovoltaic cells [6] - Despite manufacturers reducing silver usage per panel through thrifting, overall photovoltaic demand is projected to be around 194 million ounces in 2026, with additional demand from electric vehicles, power grid infrastructure, and electronics [6] Group 5: Key Forces in 2026 - The ongoing supply deficit, characterized by six years of demand outpacing mine output, has further depleted above-ground stockpiles, with mine supply growth constrained as most silver is produced as a byproduct of other mining activities [7] - Solar demand continues to expand globally, making it the largest industrial consumer of silver, despite a decline in silver usage per panel [7] - New export restrictions from China, effective January 2026, have tightened global physical supply by limiting eligibility for silver exports to larger producers [7] - The macroeconomic backdrop, including expectations for Fed rate cuts, a weaker dollar trend, and heightened geopolitical risks, supports silver's dual role as an industrial metal and a safe-haven asset [7]

Market Expectations & Fed Policy - The market is increasingly pricing in Federal Reserve rate cuts, potentially up to three, which is driving futures higher in both Europe and the United States [1] - A "shadow Fed chair" situation, potentially influenced by early announcements of successors, is contributing to a softer dollar and slightly softer yields [2] Dollar & Yield Trends - The dollar is experiencing a firmly entrenched downward trend, making it easier for that trade to continue [3] - While the dollar is expected to continue its decline, yields may not decrease much further due to upcoming risks [4] US Market Performance & Global Implications - US stock markets are expected to continue to outperform over the coming years, especially when factoring in currency effects [5] - US stocks have outperformed for the last 14 years, and any reversal will take many years to materialize, making it a long-term structural story rather than a short-term trade [7] - A situation could arise where the US market appears strong for American investors but unfavorable for non-US investors due to currency factors [4][6][7] US Fiscal Situation & Debt Concerns - The widening differential between the US and the rest of the world could persist or even worsen in the short term [8] - There is increasing concern about the US fiscal and debt situation, with worries about a potential crisis or scare in the debt market [9][10] - Until the US debt situation improves, yields and the dollar are expected to continue to diverge [10]