Silver Hit $64.26 Today. Solar Companies Just Replaced It With Copper.
Silver recently experienced a significant decline, touching an intraday low of $64.26, which represents a 14% drop for the month. This price action is the result of two separate but converging stories: a hawkish shift in Federal Reserve monetary policy and a major technological transition within the solar industry.
The first story involves a "mechanical" shift in monetary expectations. Nine Federal Reserve officials now project at least one rate hike before December 2026, a sharp move from zero officials in the previous dot plot. With the probability of a September hike sitting at 70%, bond yields have spiked, with the 2-year Treasury reaching 4.19%. Because silver does not pay interest, these higher yields increase the opportunity cost of holding the metal, driving capital into fixed-income assets and strengthening the US dollar.
Simultaneously, a structural shift occurred in industrial demand. Longi Green Energy, the world's largest solar manufacturer, announced it has begun replacing silver with copper in commercial production. This move was driven by silver’s rising cost, which jumped from 3% to 29% of a solar module's total expense in just three years. This substitution is expected to cause a 20% reduction in silver usage across the solar industry over the next 18 months, potentially removing 37 million ounces of annual demand.
Despite these bearish headlines, the source argues the structural supply deficit remains the dominant long-term force. While solar demand is contracting, other sectors—including electric vehicles (up 8%), AI infrastructure (up 12%), and defense (up 6%)—are increasing their silver consumption. Overall industrial demand is only expected to contract by 3% this year, remaining well above 550 million ounces.
Crucially, global supply cannot easily respond to these shifts. Approximately 70% of silver is mined as a byproduct of other metals, meaning production is tied to copper and zinc demand rather than silver prices. This has resulted in a projected 46 million ounce deficit for 2026, marking the sixth consecutive year of structural shortfall.
Moving forward, the $60 price level is the critical technical support; holding above this keeps the long-term bull market intact. With the gold-silver ratio at 62 suggesting undervaluation and physical investment demand projected to rise 20%, the current correction may represent a value opportunity as finite above-ground inventories continue to be depleted.