Here Comes the Silver Shortage

22 Nov

Here Comes the Silver Shortage

With the US Mint and other suppliers woefully behind on minting silver coins, coupled with high premiums on popular silver investment products, no one could possibly feel blindsided to hear research reports reveal a developing silver shortage.

Net jewelry and physical investment silver demand will finish 2022 50 million ounces higher than last year, according to a newly released report from The Silver Institute, a non-profit international research and trade association.  

The report attributes the surge to “investor fears of high inflation, the Russia-Ukraine war, recessionary concerns, mistrust in government, and buying on price dips.”

silver bars

Total 2022 global silver demand is expected to climb 16 percent from 2021 for a new record high of 1.21 billion ounces.

Silver mining output is only expected to increase by 1 percent for the current year to a total of 830 million ounces. High inflation, particularly oil and natural gas prices have been a factor in mine production.

Altogether The Silver Institute projects a record silver deficit this year of 194 million ounces.  That would be four times the deficit experienced in 2021 and result in two consecutive years of silver deficit.

The report cites three specifics contributing substantially to surging demand:

Industrial demand is on course to grow to 539 million ounces. Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies and government commitments to green infrastructure will have industrial demand overcome macro-economic headwinds and weaker consumer electronics demand.

Silver jewelry and silverware are set to surge by 29 percent and 72 percent respectively to 235 million ounces and 73 million ounces this year, mainly thanks to an unprecedented rebound in Indian demand. This has partly been driven by strong inventory replenishment ahead of the festive and wedding season, following heavy stock depletion in 2021.

Additional details are available at The Silver Institute.