For instance, while Fed Funds Futures suggest an interest rate of nearly 2.5% by year end (we’re there already, on Wednesday the Federal Reserve enacted its second consecutive 0.75% increase, taking its benchmark rate to range of 2.25-2.5%), the Silver Institute “finds this excessive,” arguing that “expectations sooner or later will be adjusted, which should offer silver some support.” While rising US interest rates will put pressure on the silver price, a number of supporting factors should limit the decline in its full-year average to 5%, says SI. (more on the expected supply deficit below) This will not be enough to meet global demand, which is forecast to rise by 5%, thanks to gains in industrial fabrication and a continued post-pandemic recovery in jewelry and silverware. This year, the Silver Institute says that higher mine production, due to both project ramp-ups and some gains in established mines’ output, coupled with a rise in industrial recycling, will drive a 3% increase in global silver supply. Industrial fabrication rose by 9.3% to 508.2 million ounces, or 15,087 tonnes, which was the highest tracked by the Silver Institute since 2010. The largest area of demand volume came from coin and bar purchases, followed by industrial demand, with the latter due to a resumption of industrial operations and the re-opening of businesses following covid-19 lockdowns and restrictions in 2020-21. According to SI, “All areas of silver demand strengthened, boosted by a post-pandemic recovery in activity, secular factors driving industrial offtake and a surge in retail investor appetite for the metal.” But when it trades as a monetary metal moves are explosive… Silver survey says…Ģ021’s Silver Institute Survey made headlines for being the first year since 2015 that the silver market recorded a deficit. Because over half of supply is needed for industrial applications, silver usually trades more like an industrial metal than an investment commodity. In comparison, silver commands a relatively small amount for investment, just 40% of supply. However, since very little gold is used by industry, it trades as an investment commodity - prices moving up and down in relation to factors like the US dollar, inflation, interest rates and sovereign bond yields. Of the 60% used for industrial applications almost 80% ends up in landfills.ĭespite silver being about 17.5 times more plentiful than gold in the Earth’s crust, silver and gold have roughly the same amount, ~2.5 billion ounces, available for investment purposes. It is estimated around 60% of silver is utilized in industrial applications, leaving only 40% for investing. While most mined gold is still in existence, either cast as jewelry, or smelted into bullion and stored for investment purposes, the same cannot be said for silver. More commonly, it is mined alongside gold, or as a by-product of zinc-lead ore. “Native silver” found in the Earth’s crust on its own, is relatively rare. Under 30% of silver comes from primary silver mines.
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