Silver Demand to Turn Bullish as Market Heads for Deficit

In an annual interim report released last week by the Silver Institute, data shows that silver demand is expected to hit a record high of 16% to 1.21 billion ounces this year, creating the decade’s biggest deficit.

The Silver Institute expected a 194.00 million ounces deficit this year from merely 48.00 million ounces in 2021.

A study of the silver market from a British research firm also shows that industrial demand will likely grow to 539.00 million ounces this year as the global green energy transition, increased adoption of 5G technologies, and growing demand for electric vehicles continues to push the demand.

Consequently, the outlook for physical demand may rise by 18% to 329.00 million ounces from a year before.

Meanwhile, analysts are observing India as the country doubled its average imports in the last five years, effectively leading the worldwide silver demand. In the annual precious metals conference of the London Bullion Market Association last month, analysts noted that India might begin importing 10,000 tons of silver.

On the other hand, data from the Silver Institute shows the likelihood of an increase in silver’s mine production by 2% to 843.30 million ounces this year, from 822.60 ounces last year. However, total projected demand, including jewelry, investments, and industry, may rise by 5% to 1,101.80 ounces in the same year.

Silver Price Volatility

One major factor affecting the silver price is the Fed’s bullish monetary policy, as shifting expectations drove the silver price to more than 21% for the past two months, effectively pushing prices above $22.00 an ounce for a brief period of time.

Another factor that pushed the price is the report that the amount of silver stored in the vaults monitored by the London Bullion Market Association and Commodity Exchange has dropped by 25% to 370.00 million this year.

According to an analyst, the volatility of the silver price is due to silver having traits of both an industrial metal and precious metal.