The Silver Deficit: Why It Matters Now

David Morgan’s weekly perspective focuses on the silver deficit, but he argues that today’s deficit must be understood in historical context.

He explains that silver was also in a major structural deficit from roughly 1990 through 2006, lasting about fifteen consecutive years. According to a CPM Group chart from the 2007 Silver Yearbook, Morgan estimates that this period added up to approximately 1.5 billion ounces of cumulative deficit. Yet despite that large shortfall, the silver price did not rise dramatically during most of that period, which he considers unusual compared with how other commodities typically respond to sustained deficits.

The key question Morgan raises is: why should the current silver deficit matter more than the previous one? His answer is awareness. From 1990 to 2006, silver had investors, industrial users, and safe-haven buyers, but the market was far less visible than it is today. By 2026, silver has much greater industrial demand, broader investment interest, and more public attention. Because of that increased awareness, he believes today’s deficits may have a stronger impact on price than the deficits of twenty years ago.

Morgan also explains that annual deficits are supplied by drawing down above-ground inventories. He notes that in 1980 there were roughly 2 billion ounces of silver in commercial bar form, and after years of deficits, that stockpile may have been reduced significantly by 2006. His conclusion is that deficits do matter, but they matter more when a market has greater awareness, stronger demand, and fewer available above-ground inventories.

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