India’s 15% Tariff Shock and a Deepening Supply Squeeze Pull Silver in Opposite Directions

Silver closed Friday at $77.55 per ounce, down 9.12% in a single session and deep in double-digit territory for the week. The slide erased a sizable chunk of the metal’s gains since its record high near $117 in late January. But while traders rushed for the exits, the physical market has rarely been tighter—a paradox that is setting the stage for a volatile tug-of-war.

The immediate catalyst came from New Delhi. India stunned markets by hiking import duties on silver and gold to 15%, reversing the cuts it implemented only in 2024. The move is an attempt to curb a widening trade deficit after the country’s silver purchases surged 44% last year to more than $9 billion, but industry insiders warn it could revive smuggling routes. The tariff shock landed on top of already simmering macro concerns: rising US inflation expectations, the ongoing Iran crisis and the blockade of the Strait of Hormuz have all kept risk appetite subdued. The market has fully priced out any Federal Reserve rate cuts for 2026, and some participants are even bracing for hikes by December.

Yet the short-term bears face a stubbornly bullish backdrop. The silver market is headed for its sixth consecutive annual supply deficit, with the Silver Institute already pencilling in another shortfall for 2026. Global stockpiles have been drained by hundreds of millions of ounces over that period. The solar industry is the main culprit: silver paste has replaced polysilicon as the single largest cost component in photovoltaic modules, accounting for about 17% of panel costs. Suntech-toppling manufacturer LONGI Green Energy is accelerating a switch to copper-metallized cells, but until those alternatives reach scale, the sector’s demand is relentless. Analysts estimate the photovoltaic industry could absorb up to 41% of global silver supply by the end of the decade.

Should investors sell immediately? Or is it worth buying Silber Preis?

The supply side is barely budging. Global mine output grew only about 1% last year, held back by the fact that most silver is a byproduct of copper, lead and zinc mining—making production unresponsive to price signals. What little new metal emerges is increasingly diverted to Asia. Mexican, Chinese and Peruvian mines ship directly to industrial users in the East, while Western vaults continue to empty. Chinese exports via Hong Kong have risen sharply, and trading volumes on the Shanghai futures exchange are running well above normal.

Chart technicians now watch the 50-day moving average near $77 for support. A successful hold could open a path back to the $85 resistance zone in the medium term, especially if the US-China tariff truce bolsters industrial demand. But with annualized volatility soaring past 57%, the market is unlikely to find calm soon. Friday’s rout may feel like a decisive break, but the deepening physical shortage could just as easily snap prices back the other way.

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