Demand for silver coins and bars decreases in 2017

Demand for physical silver is expected to fall 5% this year compared to last year, according to the report Thomson Reuters GFMS in a preliminary annual report on the silver market. The main reason for this is a decline in demand for silver coins and silver bars, which is expected to be 37% lower this year than a year ago. The decline is partly offset by an increased demand for the precious metal for the production of solar panels.

In the United States in particular, interest in the precious metal declined, in favor of traditional investments such as stocks and bonds and alternative investments such as virtual currencies. This is also evident from the sales figures of the American Eagle coins, which have almost halved compared to previous years. But interest in the precious metal also declined elsewhere in the world, for example in China. There, too, investors preferred other investments such as shares.

Figures from Thomson Reuters GFMS show that an estimated 130.1 million troy ounces will be used this year for the production of Silver Coins and bars, far less than the 205.6 million troy ounces in 2016 and 290.8 million troy ounces in 2015. Exchange-traded fund inflows also declined, from 49.9 million troy ounces in 2016 to an expected 14.9 million troy ounces this year.

Solar panels

The decline in demand for silver as an investment object is partly offset by an increase in industrial demand. The demand for silver for electronic devices has risen a few percent this year, but much more startling was the 20% increase for the production of solar panels. Approximately 92 million troy ounces of silver will be used for this application this year. If we look at the development of recent years, this is still an important growth market for silver.

Demand for silver coins and bars is lower this year (Source: Thomson Reuters GFMS, via Silver Institute)