UBS reaffirmed its positive stance on silver, saying the macroeconomic environment for real assets remains supportive and could drive prices higher despite recent volatility in the precious metals market.
A recent sell-off has pushed silver prices to roughly $60 per ounce, as investors sought liquidity during ongoing geopolitical tensions in the Middle East. The decline reflects investors’ “quest for liquidity amid ongoing military confrontations in the Middle East,” strategists Wayne Gordon and Dominic Schnider said in a note.
However, the strategists cautioned against reading too much into the recent weakness. While silver may be “not an effective hedge against a sharp rise in uncertainty or liquidity needs, we believe investors should avoid extrapolating the recent price slump,” they added.
Silver has experienced significant price swings in recent weeks, with realized volatility around 85%. The metal has largely moved in tandem with gold, with the gold-to-silver ratio climbing toward 70x during the latest geopolitical tensions before easing slightly.
Although silver exchange-traded funds (ETFs) have recorded sharper outflows — roughly 64 million ounces, equivalent to about 7.5% of peak holdings — UBS noted that silver has only slightly lagged gold performance so far this year.
In the short term, the bank sees potential pressure from industrial demand, which accounts for more than half of global silver consumption. The strategists warned that slower economic growth and elevated market volatility could weigh on both industrial and investment demand in 2026. As a result, UBS’s current deficit estimate of around 300 million ounces could narrow.
Over the longer term, however, UBS expects stronger structural support for the metal. Rising oil prices and concerns about fossil fuel supply could accelerate investment in solar energy, increasing demand for silver used in photovoltaic technology.
“Since we see the backdrop for real assets as conducive—lower real rates in key economies, mounting debt challenges, and long-term USD weakness—the prospect for silver is one of higher prices,” the strategists wrote.
UBS expects silver to continue moving broadly in line with gold, projecting the gold-silver ratio to remain around 70x over the next 12 months.
From a trading perspective, the bank reiterated its preference for volatility-selling strategies, highlighting elevated options volatility of roughly 55–60%. The strategists favor selling downside price risks to capture yield while silver trades above $55 per ounce over the next three months.