On July 29, 2026, the precious metals market underwent structural changes. Spot silver prices hit an intraday high of $38.42 per ounce, a new high since 2024, while gold prices fluctuated narrowly around $2,800 per ounce. Notably, the gold-silver ratio (gold/silver price ratio) fell to 72:1, the lowest level of the year and far below the historical average of 80:1. Market analysts say the core driver of this change is the explosive growth in industrial demand for silver.
Industrial Demand: Silver’s ‘Green Engine’
Silver’s role as an industrial metal is being repriced. The latest data from the Silver Institute shows that global industrial demand for silver grew 15% year-on-year in the first half of 2026, reaching a record 580 million ounces. Among that, photovoltaic industry silver consumption grew 22% year-on-year, accounting for 32% of total industrial demand. With countries accelerating the renewable energy transition, installed photovoltaic capacity continues to climb, with each GW of PV modules consuming about 20 tons of silver, making it a key material in the clean energy supply chain.
In addition, demand for silver in 5G communication, new energy vehicles, electronic components and other fields is also expanding. The demand for high-frequency, high-reliability connectors for 5G base station construction, and the growth in silver use for conductive paste in electric vehicles, together have pushed up industrial consumption of silver. Market research firm CRU Group expects global industrial demand for silver to exceed 1 billion ounces by 2030, maintaining a compound annual growth rate of over 8%.
Supply Side Tightening: Declining Mine Output and Recycling Constraints
In contrast to the hot demand side, silver supply growth is sluggish. Global silver mine output grew only 1.2% year-on-year in the first half of 2026, mainly due to declining ore grades and labor disputes in major producing areas like Peru and Mexico. Meanwhile, silver recycling volume, limited by scrap collection efficiency, rose just 0.5% year-on-year. The supply deficit is expected to reach 30 million ounces this year, the third consecutive year of supply shortage.
London Bullion Market Association (LBMA) data shows that as of July 28, global silver inventories stood at 320 million ounces, down 12% from the beginning of the year. COMEX silver futures inventories also fell to a two-year low. The supply tightness provides solid support for silver prices.
Gold-Silver Ratio: Divergence and Reversion
The continued decline in the gold-silver ratio reflects silver’s strong performance relative to gold. Traditionally, gold is driven by macro factors such as central bank policies and geopolitical risks, while silver has both financial and industrial attributes. With the Fed’s rate hike cycle nearing an end and expectations of global central bank rate cuts heating up, gold remains high in a range; but silver, driven by industrial demand, has outperformed gold significantly.
Historical data shows that the gold-silver ratio typically declines during economic recovery or expansion, as increased industrial activity boosts silver demand. The last two times the ratio fell below 70 were in 2011 and 2020, after which silver prices rose more than 50%. The current ratio of 72 still has significant room to fall from the historical extreme (120 in 2018).
Investment Perspective: Silver’s Allocation Value Stands Out
For investors, the cost-effectiveness of silver is rising. Compared to gold, silver prices are closer to the industrial cost line, with limited downside risk; meanwhile, supply deficits and demand growth provide upside elasticity. Several investment banks have recently raised their silver price targets. In a report released on July 28, Goldman Sachs raised its year-end 2026 silver target from $40 to $45 and recommended investors increase silver allocation in their portfolios.
On the Asian market, the silver T+D contract on the Shanghai Gold Exchange traded actively, closing at 8,250 yuan per kilogram on July 29, a record high since listing. Domestic spot silver premiums remained at 80-100 yuan per kilogram, indicating strong physical demand.
Outlook: Key Catalysts to Watch
Looking ahead to the second half of the year, the market will closely monitor several key events. First, the early August US ISM manufacturing data: if it continues to improve, it will strengthen the industrial recovery outlook and benefit silver; second, the September Fed rate decision: if rate cuts begin, it will weaken the dollar and boost the overall valuation of precious metals. In addition, the global photovoltaic installation peak season (Q3-Q4) is typically accompanied by a silver procurement peak, which may further push up silver prices.
However, investors should also be alert to short-term volatility risks. COMEX silver futures net long positions have risen to historical highs, creating profit-taking pressure. Additionally, if the global economy unexpectedly falls into recession, industrial demand may suffer and silver prices could face a correction. But in the medium to long term, the green industrial revolution narrative for silver remains intact.
In summary, the gold-silver ratio hitting a new year low is the most significant structural signal in the current precious metals market. For investors tracking real-time gold and silver prices, it is advisable to closely monitor silver’s industrial supply-demand data and ratio changes, and flexibly adjust positions.
