UBS has reaffirmed a constructive stance on silver, saying that longer-term structural forces for real assets are likely to put upward pressure on the metal despite recent turbulence in precious-metals markets.
In a note, strategists Wayne Gordon and Dominic Schnider pointed to a fresh sell-off that has dragged silver to around $60 per ounce. They attributed the move largely to investors' "quest for liquidity amid ongoing military confrontations in the Middle East," and warned that silver does not serve as an effective hedge against a sharp spike in uncertainty or sudden liquidity needs.
Still, Gordon and Schnider urged investors not to extrapolate the latest slump into a durable downtrend. They emphasize that recent volatility and forced selling can distort short-term price signals, even if they temporarily outweigh underlying demand factors.
Market volatility and ETF flows
Silver has experienced pronounced swings recently, with realized volatility near 85%. The metal has broadly tracked gold through the turbulence, with the gold-silver ratio moving up toward 70x during heightened geopolitical tensions before easing.
Precious-metals exchange-traded funds have seen notable outflows in silver specifically: roughly 64 million ounces have left ETFs, equivalent to about 7.5% of peak holdings. Despite these larger outflows relative to bullion funds, UBS notes that silver has only marginally underperformed gold on a year-to-date basis.
Demand outlook and supply deficit risks
UBS flags near-term pressure from industrial demand, which accounts for more than half of silver consumption. The strategists said growth risks and persistent elevated volatility could weigh on both industrial offtake and investment demand in 2026. As a result, their supply deficit estimate of roughly 300 million ounces could be at risk of narrowing if consumption softens.
At the same time, UBS highlights a pathway for stronger support over a longer horizon. The bank says higher oil prices and worries about fossil-fuel supplies could speed investment in solar power, gradually boosting silver demand from photovoltaic applications.
Macro backdrop and price outlook
Gordon and Schnider point to a macro environment that they view as favorable for real assets - lower real interest rates in key economies, mounting debt challenges, and a longer-term tendency toward US dollar weakness. Taken together, these factors underpin their view that silver is more likely to move higher over time.
UBS expects silver to continue tracking gold, projecting the gold-silver ratio to remain around 70x over the next 12 months.
Strategy implications
From a trading perspective, the strategists maintain a preference for volatility-selling approaches. They note that option-implied volatility sits near 55-60% and see an opportunity to sell downside price risk for a yield pickup, targeting levels above $55 per ounce across the coming three months.
Collectively, UBS's view balances short-term downside pressures tied to liquidity needs and industrial demand against longer-term real-asset dynamics that the bank believes will support silver prices.