Will silver surpass gold in 2024?

Silver has a Impressive increase of almost a quarter, leaving gold far behind and one of the best-performing commodities of 2024. Despite this increase, silver remains relatively cheap. Currently, about 80 ounces of silver is needed to buy 1 ounce of gold, compared to a 20-year average of 68.

Demand for silver is increasing

Both gold and silver have similar properties when it comes to macroeconomic properties and currency hedging. While the Gold price reached a record high due to central bank purchases and renewed retail interest in China, the economy is benefiting from Silver price part of this trend. While there has been little investor interest in silver-related exchange-traded funds (ETFs), physical sales of silver have increased. This is a trend that we also see with Holland Gold. More and more people want to Buy silver by means of Silver bars and Silver Coins. 

Market Shortages and Record Usage

The Silver market is heading for its fourth consecutive year of shortages. The second largest deficit ever predicted for 2024 is forecast. In January, the gold-silver ratio was above 90, the most extreme ratio since September 2022. Citigroup Inc. predicts that if the Federal Reserve cuts interest rates and economic growth remains strong in the second half of the year, the ratio could fall to around 70.

Silver is valued for both its financial and industrial applications, particularly in clean energy technologies. The metal is a major component of solar cells, and with the strong growth in this industry, the use of silver is expected to reach an all-time high this year. As a result, the market for the Fourth consecutive year in deficit, with this year's second-largest deficit on record.

Declining inventory levels

The stocks of silver that are followed by the London Bullion Market Association (LBMA) have fallen to the second-lowest level on record in April. Stocks on the New York and Shanghai stock exchanges are also near seasonal lows. According to TD Securities, the LBMA Stocks in the next two years if demand continues at the current pace. Daniel Ghali, a commodities strategist, emphasizes that the stock numbers can be misleading because they also include ETFs' holdings.

Expectations for the future

According to Gregor Gregersen of Silver Bullion, the demand for silver will continue to rise due to growing industrial demand. "If investors also start buying, then in two or three months' time, my biggest problem might be 'Where do I find the stock?' instead of 'How do I sell the silver?'" This highlights the growing tension between supply and demand in the silver market, which is likely to continue to increase as more investors and industrial users make their way into the precious metal.

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On behalf of Holland Gold, Paul Buitink and Joris Beemsterboer interview various economists and experts in the field of macroeconomics. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here  to subscribe.