Silver Linings

What You Need to Know:

• We anticipate supply deficits in the physical silver market for a sixth straight year.
• With tempered expectations on demand, focus has shifted to supply constraints with a dearth of new mines coming online.
• Our Commodity Strategy desk remains cautious on silver with focus on U.S. retail investment demand following recent volatility.
• We view producers as well-positioned given unprecedented margin expansion building on net cash positions.
• We anticipate intensified competition for silver assets leading to increased consolidation.

Report originally published February 9, 2026.

The TD Cowen Insight

We remain constructive on silver equities in the year ahead given record margin expansion and manageable cost inflation. While our commodity strategy group remains cautious around potential unwind of speculative activity as Section 232 risks subside, we see producers remaining well-positioned. We outline ways for investors to navigate silver exposure based on risk appetite given recent volatility.

Our Thesis

We view silver equities being well-positioned, with the sector remaining in good health amidst robust free cash flow (FCF) generation, deleveraged balance sheets and increasing return of capital. Given ongoing supply deficits and a dearth of advanced-stage projects resulting in constrained new mine supply, we anticipate increased competition for primary silver projects leading to continued consolidation in the space.

While our commodity strategy group views potential for an unwind of speculative activity post-addition of silver to the critical minerals list in November 2025, we note that silver equity betas have collapsed over the past two months, indicating that the equities have not fully priced-in sustained higher silver prices.

Our Holistic Analysis

The full report includes analysis across our commodity strategy and mining equity research team, providing a holistic view of the sector encompassing the physical silver market and silver equities. We are also initiating coverage of two new North American silver growth companies. This move brings our total silver coverage to seven companies, representing over 80% of the North American Silver space by market cap and providing a broader offering for investors across the risk spectrum.

While our commodity strategy group views risks around Section 232 beginning to subside alongside repletion of London inventories, we believe silver producers remain well positioned to capitalize on record metal prices and unprecedented margin expansion. We include a comprehensive overview of the space analyzing industry health, physical silver trading activity, company/asset positioning and fundamental/precedent valuations.

What to Watch

Sustainability of silver prices, with a focus on retail demand and physical inventories. We remain cautious on the ability to sustain higher silver prices, which in our view were largely driven by speculative activity post-addition of silver to the United States Geological Survey (USGS) critical minerals list in November 2025. We view Section 232 risks beginning to subside along with improvement in available physical inventories, including a repletion in London back to levels last seen in early 2025. As well, we see retail demand for precious metals having driven the recent surge in pricing — particularly out of China and India — in part exacerbated by moot fears of import duties in India and reports of potential Chinese export restrictions. As such, we continue to view caution on the sustainability of higher silver prices given improving physical availability and potential for moderating retail/speculative demand.

Containment of costs/capex amidst unprecedented margin expansion. We view margin expansion encountered over the past year reaching unprecedented levels with a significantly higher silver price offset by manageable cost inflation. However, we view key focus ahead around sustainability of margins predicated on cost containment and manageable capital expenditures.

• On costs, we view potential for a reduction in cutoff grades to result in the processing of additional lower-grade economic material resulting in higher costs, along with ongoing inflation pressure related to labour.
• We anticipate greater capital spend ahead as producers catch up on deferred projects and allocate budgets towards advancing growth initiatives. As such, we view increased emphasis around sustainability of this unprecedented level of margin expansion.

Permitting in Mexico has slowed due to regulatory delays under the previous Andrés Manuel López Obrador (AMLO) regime, although this has appeared to have improved over the past few months under the new Sheinbaum administration. With Mexico accounting for nearly half of all production from primary silver mines globally, this has led to a dearth of advanced-stage projects — with the few that remain still several years away. As a result, we continue to anticipate ongoing supply constraints and a focus on the pace of project advancement.

We anticipate a renewed focus on project development given ongoing supply deficits and lack of new mine supply from primary silver assets. With equity markets having reopened over the past year for junior developers supported by stronger metals prices, we view new projects being advanced more aggressively to begin to address the output gap. We view potential for increased focus on projects with greater scale — despite the larger capital requirements — given an improved ability to finance and an emphasis on projects that are able to move the needle with more meaningful production.

We view potential for continued M&A activity in the silver space. Asset scarcity for primary silver projects has resulted in strong competition for single-asset silver producers over the past year at healthy takeout. Producers continue to generate robust FCF building on net cash positions supporting our view of potential for continued M&A activity. Among our coverage, we anticipate a focus ahead on consolidation of smaller producers and advanced-stage development projects given relative scarcity of new production.

Key Takeaways

Supply/Demand dynamics continue to highlight lack of growth in mine-site supply

Ongoing supply deficits for physical silver mark the sixth consecutive year of anticipated shortfalls. However, a shrinking deficit as reduction in growth expectations has resulted in a transition from demand-driven deficits to one centered around supply constraints due to a dearth of new mine development. We view challenging financing conditions in Mexico under the prior AMLO administration leading to lack of advanced-stage primary silver deposits.

Cautious outlook on silver with a potential pullback in speculative activity

Our Commodity Strategy group continues to view caution on pricing for physical silver with Section 232 risks beginning to subside. This could drive an unwind in the speculative activity seen after the USGS critical minerals list added silver in November 2025. Global inventories have started to improve with a repletion in London and silver lease rates have declined, suggesting greater physical availability. As a result, inventory constraints within the London Bullion Market Association (LBMA) have now improved back to the levels seen in January 2025, which we anticipate will result in an easing in upward pricing pressure. We would view downside risk should speculative retail activity exit the silver space following a recent significant increase in volatility. As such, we view a tempered outlook in sustaining the surge in physical pricing seen over the past few months.

Producers well-positioned amidst unprecedent margin expansion

We continue to view producers being well-positioned, with most at — or near — net cash positions and robust FCF anticipated ahead given unprecedented margin expansion. Over the past year, we estimate margin expansion via all-in costs (prior to growth capital) has increased to more than three times the prior record levels seen during the 2020-2021 COVID-19 period. Looking ahead, we anticipate investor focus on sustained margin expansion via cost containment as some producers begin to lower cut-off grades, along with budgeted capital spend in restocking growth pipelines given a dearth of advanced-stage silver projects. We view producers remaining well-positioned fundamentally to continue to build on net cash positions while reinvesting in growth initiatives.

Focus on further consolidation ahead

We view potential for intensified competition for primary silver deposits given scarcity of assets and strong FCF generation across the space. This follows on from acquisitions completed over the past year for single-asset producers at healthy premiums. Overall, we view increasing focus on capital allocation decisions ahead, which we anticipate will result in intensified competition for primary silver assets.

Varying silver exposure based on different risk profiles

We highlight various ways for investors to gain exposure to silver based on varying levels of risk tolerance. Amidst recent volatility, we highlight larger-cap, lower-beta names which offer greater production and diversified portfolios across a broader asset base. Lastly, we highlight our initiation of coverage on two new names in different stages of growth.