How long can the silver market keep running deficits?

One thing I keep coming back to with silver is that the supply side still looks pretty tight, even with all the noise around the price.

The Silver Institute is expecting another deficit in 2026, which would make it six years in a row that demand has been running ahead of supply. Mine production is only expected to grow modestly too, so it is not like higher prices are suddenly bringing a massive amount of new silver onto the market.

And silver has a bit of a unique supply problem because so much of it is produced as a byproduct of lead, zinc, copper and gold mines. If silver goes up, a copper miner is not necessarily going to change its production plans just to produce more silver.

That is partly why I have been paying more attention to producers.

Sierra Madre Gold and Silver (TSXV: SM, OTCQX: SMDRF) is a Mexico focused silver and gold producer operating the La Guitarra Mine Complex. They bought La Guitarra from First Majestic, restarted the operation and brought it back into commercial production at the start of 2025.

They are now actually selling metal into this market. Q1 2026 was a record quarter with US$10.1M in net revenue and US$2.8M in adjusted EBITDA, and they are still working on increasing production at La Guitarra.

To me, that is an interesting position to be in if the silver market stays tight.

There are plenty of developers out there with huge resources, but they still have to finance and build the mine before they can take advantage of these prices. That can take years.

A producer like SM is already on the other side of that hurdle.

If silver stays strong over the next few years, where do you think the best leverage is?

The big developers with hundreds of millions of ounces in the ground, or smaller producers like Sierra Madre where stronger silver prices can start showing up in the numbers right away?