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Demand for silver is expected to increase by 27% this year to 236.8 million troy ounces, the highest level since 2015. Investors are not only buying more silver bars this year and Silver Coins, the popularity of silver ETFs also took off. Since the beginning of this year, the stocks of these investment instruments have increased by 326 million troy ounces to a total of more than 1 billion troy ounces. Never before have ETFs had so much silver under management, it concludes Silver Institute.
The Silver Price has risen sharply this year, an increase that has been accompanied by high volatility. In March, investors were still selling silver en masse and the price of the precious metal fell as much as stock prices. This was followed by a strong recovery, driven by high demand for investment silver. This caused large fluctuations in the gold/silver ratio. In March, you still got 127 troy ounces of silver for a troy ounce of gold, but in November that ratio had dropped to 76. This is still high from a historical perspective, but not as extreme as at the beginning of the corona crisis.
The price of silver has fluctuated widely this year
In other segments of the silver market, demand declined. According to the Silver Institute, industrial demand came in at 466.5 million troy ounces this year, the lowest level in five years. The demand for silver for use in solar panels also decreased. This market is estimated to account for 88 million troy ounces this year, a decrease of 11% compared to last year.
Due to the corona crisis, there was also less demand for silver jewellery in important markets such as the United States and India. Due to the lockdown measures, jewellers were closed for some time, but much more important was the economic impact of the corona measures. People were hit particularly hard financially in emerging economies. As a result, fewer pieces of jewellery were sold.
The total supply of silver is likely to be smaller this year than last year. According to the Silver Institute, total silver mine production will fall 6.3% this year to 780.1 million troy ounces. This is mainly due to corona measures, which forced some mines to close temporarily. This affected the mining sector in key production countries such as Mexico, Peru and China. These production problems are now over.
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Global demand for investment silver has increased sharply this year (Source: Silver Institute)
This contribution was made from Geotrendlines
