Since March, silver increased by 56%

The silver institute has published a report recently. According to it, the demand for the precious metal grew 10% in the first half of this year, compared to 2019.

The white metal price averaged $16.65 an ounce during the first half of the year. Silver value dropped significantly in the middle of March. However, it saw a 56% increase soon, and at the end of the June metal price reached $18 an ounce.

Silver ETPs accumulated the highest amounts of silver in history. They acquired 925 million ounces, which is equal to the 14-month global supply of silver.

As for physical silver, the interest in buying bullion or silver coins has been tremendous. Bullion sales have increased by approximately 60% year-on-year. Investors’ interest in purchasing physical silver resulted in the lack of the commodity. Between March and April, many traders ran out of stock.

The Gold/silver ratio is likely to drop, according to the Silver Institute

The gold/silver ratio, the amount of silver needed to purchase gold, reached its historical maximum in March with 127 points. However, it dropped to 97.8 at the end of June. The silver Institute indicates that the white metal is still undervalued compared to the prices of gold.

The report also indicated that the drop in supply from mining is expected to continue. During the coronavirus pandemic, many mines closed temporarily, forced by the control measures in the central producing countries.

Even though most fields are already operating at full capacity, a drop of approximately 7% in silver production is forecast compared to the figures for the same period of the previous year.

The Silver Institute forecasts that investment flows will continue to be necessary during the second half of the year. It’s because of the investors’ belief that it is undervalued compared to gold, meager interest rates, the reduced opportunity cost of investing in precious metals, and unprecedented injections of liquidity by central banks.

The report concludes that the silver price is likely to exceed $21 an ounce at the end of 2020. It will mean a drop in the gold/silver ratio to around 90 points.