Muzhu Mining Ltd. (CSE: MUZU)
Creating lasting wealth by developing gold and silver properties with near-term mining potential
Although silver has not performed as well as its sister metal, gold, in many aspects such as liquidity, momentum, and safe-haven demand. However, silver also has a unique advantage in the form of huge industrial demand. In 2024, once the economy shows signs of an earlier recovery, analysts expect silver prices to receive further support from strengthening industrial demand. By mid-2024, the silver price is expected to reach $26 per ounce.
According to a new report from the Silver Institute, silver prices continue to struggle as economic uncertainty and restrictive interest rates weigh on investor demand; however, as an industrial metal, the silver market remains well supported. The Silver Institute predicts that global silver demand is expected to reach 1.2 billion ounces in 2024, which would be the second highest level on record.
Industrial silver demand is expected to grow by 4 per cent this year to a record 690 million ounces, as solar and electric vehicle demand remain key support areas in the global green energy transition, the report said. Global photovoltaic (PV) power generation installations in 2023 have already significantly exceeded initial market expectations, and new installations this year are expected to be at a new record high.
Analysts point out that the growing field of artificial intelligence could give a new boost to consumer electronics, which would also favour industrial demand for precious metals. As for the jewellery sector, strong growth in India is expected to drive jewellery consumption up by 6% this year. In the US and Europe, weak consumer sentiment is likely to continue to weigh on jewellery consumption, but retailer restocking may mitigate some of the impact.
According to analysts, a weak point in the silver market remains investor demand. The Silver Institute said it expects physical investment to fall 6 per cent this year, to a four-year low. Solid economic growth and further rises in the US stock market will be the main causes of waning investor interest in all precious metals and bullion.
The Silver Institute believes that $22 per ounce is a solid bottom for the price of silver. While there is a lack of impetus for an upward breakout in the short term, the Federal Reserve is expected to signal a further acceleration of easing over the next year as inflation falls back towards the central bank’s longer-term target of 2 per cent. Falling real yields and a pressured US dollar will help drive new investment demand for silver and gold.
On Wednesday (31 January), the prices of both gold and silver weakened after Federal Reserve Chairman Jerome Powell signalled that there would be no rate cuts in March. The March silver futures contract last closed at $23.005 per ounce, down nearly 1% on the day.
