Silver Demand Booming

20 Nov

Silver Demand Booming

Recovering from pandemic conditions, global silver demand is forecast to reach 1.29 billion ounces this year.  Led by demand of more than a half-million ounces from the industrial sector, 2021 silver demand will exceed a billion ounces for the first time since 2015, according to a report from the Silver Institute.

stacked silver bars

Physical investment demand is surging as well.  US coin and bar are expected to surpass 100 million ounces for the first time since 2015.  The trade industry report says it expects physical demand to have increased by 32 percent by year-end, to a total of 263 million ounces.   

The growth in investment demand is coming from both the US and India, according to the new report.  “Growth began with the social media buying frenzy before spreading to more traditional silver investors.  Indian demand reflects improved sentiment towards the silver price and a recovering economy. Overall, physical investment in India is forecast to surge almost three-fold this year, having collapsed in 2020.”

“This year, the silver price has built on its 2020 gains and has continued to strengthen,” according to the Institute’s news release.  “Through to November 10, prices have risen by 28% year-on-year. This follows a 27% rise for the annual average price in 2020. The upside reflects healthy investor inflows into silver, on the back of supportive macroeconomic conditions, notably the persistence of exceptionally low-interest rates, concerns about uncontrolled fiscal expansion and, most recently, growing concerns about rising inflationary pressures.”

The increase in silver industrial demand is broad-based across market segments, with investors keeping a close eye on the growth of silver usage in the solar industry.  “Photovoltaic demand will rise by 13 million ounces, to over 110 million ounces, a new high and highlighting silver’s key role in the green economy. This will also underpin much of the forecast 10 percent gain in electrical/electronics offtake. Finally, brazing alloy and solder demand is set to improve by 10 percent in 2021, helped by a recovery in housing and construction, although this will still fall short of pre-pandemic levels.”

The report concludes that silver mining production will rise by six percent this year.  “Overall, the silver market is expected to record a physical deficit in 2021, albeit modestly. At 7 million ounces, this will mark the first deficit since 2015,” it says.