Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Silver Investment Demand Expected to Hit Five-Year High

  by    0   0

Physical silver investment is expected to surge by 27% this year, according to the latest data released by the Silver Institute.

Demand for investment silver is projected to come in at 236.8 million ounces in 2020. That would mark a 5-year high.

Silver coin and silver bar sales in the US have driven the big gains in investment demand. Retails sales are projected to rise by 62% on the year. This will more than offset the drop in silver investment demand in India – the world’s second-largest silver market.

The rising price of silver has helped drive investment demand. As of Nov. 13, the white metal was up 38% on the year.

Global holdings of silver in silver-backed ETFs have also surged this year, pushing past 1 billion ounces for the first time ever. Year-to-date gains through Nov. 13 reached 326 million ounces.

As you might expect, non-investment silver demand has dropped due to the economic contraction sparked by government response to the COVID-19 pandemic. March and April saw precipitous drops in demand, but the market has shown signs of recovery since. But industrial fabrication is forecast to drop by 9% this year to 466.5 million ounces, a five-year low.

This reflects the impact of lockdown restrictions, with supply chains heavily disrupted, end-users adopting an increasingly cautious approach to inventory replenishment and factories facing labor supply problems.”

Global demand for silverware and silver jewelry is also expected to see healthy drops in 2020.

Heavy losses in India underpin the weakness in each segment. This in turn reflects the impact of widespread lockdowns (to combat the pandemic) which hit disposable incomes, elevated — and at times record — rupee silver prices, and a weak Indian economy. The world’s second-largest jewelry consumer, the US, also weakened, although the extent of the decline was more modest than for gold and heavy destocking implies a sharp turnaround soon for this market’s suppliers.”

On the supply side, mine output is expected to drop significantly in 2020. Production is projected to fall by 6.3% to about 780.1 million ounces.  The big drop in silver output is largely a function of mine shutdowns due to the pandemic, but mine output was already trending down before coronavirus. Global mine production fell by 1.3% in 2019.

The silver-gold ratio indicates that silver remains historically undervalued compared to gold.

The silver-gold ratio is the number of ounces of silver it takes to buy one ounce of gold. It has been historically high for months. It climbed to well over 100-1 back in March. We saw the ratio shrink as silver followed its historical trajectory and outperformed gold as the yellow metal climbed above $2,000 an ounce. , dropping below 70:1 in March. Now the silver-gold ratio has opened up again to nearly 77-1.  The modern average over the last century has been between 40 and 60-1.

Looking at the big picture, the biggest driver for precious metals continues to be Federal Reserve monetary policy. In order to turn bearish on gold and silver, you have to believe the Federal Reserve is actually going to tighten monetary policy and the dollar is going to remain strong. But given the massive dose of monetary heroin the central bank has injected into the economy, the Fed really has no way out. There is no exit strategy from this extreme monetary policy. That bodes well for both silver and gold in the long-term.

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

India Gold Market Shows Signs of Life as COVID Second Wave Eases

India ranks as the second-largest gold-consuming country in the world, second only behind China, but demand has languished for the last couple of years. The pandemic crushed demand, particularly for gold jewelry, but record-high gold prices in rupee terms and government policy put a drag on the gold market even before COVID-19. There were signs of […]

READ MORE →

Russia Goes to War With Inflation

While the Federal Reserve continues to downplay inflation in the US, insisting that it is “transitory,” the Bank of Russia has gone to war with rising prices. Bank of Russia Governor Elvira Nabiullina says she sees “persistent factors” to inflation, and on Friday, the Russian Central bank hiked interest rates by 100 basis points to […]

READ MORE →

If Inflation Is “Transitory” Why Is This Happening?

Federal Reserve Chairman Jerome Powell continues to insist the surge of rising prices is “transitory. But if this is true, why are inflation projections for 2022 rapidly rising? It seems the markets aren’t buying the transitory theme.

READ MORE →

China’s Gold Market Continues to Recover

Chinese gold imports have nearly returned to pre-pandemic levels and the world’s biggest gold market continues to recover. According to the latest data reported by the World Gold Council, China imported 67.6 tons of gold in May. That was 65 tons higher than May 2020 and only three tons lower than May 2019, before the […]

READ MORE →

US Government Spending Sure Isn’t Transitory

The mainstream narrative is that the Fed will soon admit that inflation isn’t transitory. At that point, it will raise interest rates and taper its bond-buying program to fight rising prices. But this narrative ignores the elephant in the room – the ever-increasing national debt. In June, the US government ran another big deficit of […]

READ MORE →

Comments are closed.

Call Now