According to the latest industry report from the Silver Institute, the global silver market is set to experience its fourth consecutive year of physical supply deficit in 2024. This forecast, presented at the Annual Silver Industry Dinner, highlights a significant trend: robust growth in silver demand is expected to outpace only modest increases in mine production and recycling efforts.
Record Demand Amidst Declining Investment
The report, authored by Metals Focus analysts Philip Newman and Sarah Tomlinson, projects that total silver demand will rise by 1% year-over-year in 2024, reaching a new record high of 1.21 billion ounces. This increase is particularly noteworthy given the anticipated 15% decline in physical investment, which the analysts attribute to a lack of major economic crises that typically drive safe-haven buying.
The primary driver of this demand surge will be industrial applications, which are forecasted to grow by an impressive 7%, surpassing 700 million ounces—setting a new all-time high. The green economy’s expansion, particularly in the photovoltaic sector, alongside rising demand from the automotive industry, will be pivotal in this industrial demand growth.
Jewelry and Silverware: A Resurgence
In addition to industrial applications, silver jewelry and silverware fabrication are projected to see solid gains of 5%. This growth is largely driven by a recovery in the key Indian market, following a reduction in the silver import duty. As consumer confidence returns and purchasing power strengthens, the demand for silver jewelry is expected to rebound, contributing significantly to the overall demand landscape.
Supply Dynamics: Modest Increases and Recycling Growth
On the supply side, global silver mine production is expected to rise by just 1% in 2024, reaching 837 million ounces. This slight increase will be bolstered by production gains from Mexico, Chile, and the United States, which are anticipated to offset declines in other major producing countries such as Peru, Argentina, and China.
Additionally, silver recycling is forecasted to grow by 5%, reaching a 12-year high. This increase in recycling will play a crucial role in meeting the rising demand, although it may not be sufficient to close the gap created by the growing industrial and jewelry sectors.
The Impending Deficit
The net result of these demand and supply dynamics is a projected physical market deficit of 182 million ounces in 2024. While this figure is little changed from the previous year, it remains elevated by historical standards. Philip Newman of Metals Focus emphasizes the significance of this ongoing deficit, stating, “The silver market is set to record a physical deficit in 2024 for the fourth consecutive year. Record industrial demand and a recovery in jewelry and silverware will lift total demand, while mine supply will rise by just 1%.”
Implications for Silver Prices
The findings from the Silver Institute’s report suggest an increasingly tight silver market in 2024, which could lend support to silver prices that have already rallied 29% so far this year. As demand continues to outstrip supply, investors may find themselves in a favorable position, particularly those looking to hedge against inflation or economic uncertainty.
Conclusion
In summary, the silver market outlook for 2024 paints a picture of robust demand growth amidst a backdrop of constrained supply. With industrial applications leading the charge and a recovery in jewelry demand, the silver market is poised for significant developments. As we move into the new year, stakeholders in the silver industry—ranging from miners to investors—will need to navigate this evolving landscape carefully.
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This article is intended for informational purposes only and does not constitute financial advice. Investors should assess their financial situation, investment goals, and risk tolerance before making any decisions. Consulting a qualified financial advisor is recommended.
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