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According to the Silver Institute a significant increase in global silver demand is predicted in 2024, potentially resulting in the second-highest level ever recorded. This increase is mainly driven by an increase in industrial applications, but at the same time it is influenced by fluctuating investment prospects and economic factors worldwide.
The Silver question is expected to rise 1 percent in 2024, driven by record-breaking industrial demand of 690 million ounces. Innovations in the photovoltaic (PV) industry and the automotive sector, where silver is crucial for the production of high-efficiency N-type solar cells and electronic components, play a key role in this.
After a challenging year in 2023, a rebound in demand for consumer electronics is expected, thanks in part to the rollout of AI-related applications. This provides a new impetus for the Industrial demand for silver.
Demand for silver jewellery is predicted to rise by 6 per cent, mainly due to a surge in India. After a decline in 2022, a return to normal demand levels is expected, supported by a positive economic backdrop and adjustment to high rupee silver prices.
Silverware production is expected to increase by 9 percent globally, mainly driven by recovery in the Indian market. This indicates a normalisation of demand in this sector.
Expectations of an early start of interest rate cuts in the U.S. have been tempered, which could put pressure on precious metals investments. In addition, concerns about the slowing Chinese economy could affect institutional investment in silver.
Despite this, a more favorable environment for silver investment is expected in the second half of 2024, when the U.S. Federal Reserve is expected to start cutting interest rates. This could mean a resurgence of investment interest in silver.
Aggregate global silver supply is forecast to rise 3 percent to an eight-year high, mainly due to a recovery in the Mine production. New and expanding mining projects in Mexico, Russia, Chile and the U.S. are expected to contribute to this growth.
Silver production as a byproduct of base metal mines is expected to decline due to mine closures and government and community conflicts, especially in South America. In addition, silver production from zinc mines may come under pressure due to weak zinc prices.
The silver market is expected to experience a structural deficit for the fourth consecutive year in 2024, although the deficit is expected to narrow by 9 percent to 176 million ounces. This remains an exceptionhigh by historical standards.
Despite temporary headwinds, silver's positive fundamentals are expected to encourage investors to bargain hunt, especially when rate cuts begin. The longer-term outlook, including the expected reduction in inflation and easing of monetary policy, should be supportive of new investment in silver and the Silver price.
In 2024, the silver market will be at the crossroads of challenges and opportunities, with strong demand from industrial applications and recovery in jewelry and silverware. Despite potential near-term pressures, fundamental indicators point to a positive future for silver investments, supported by strategic rate cuts and economic recovery.
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