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Due to the usage of silver in electronics and clean energy technologies, the global demand for this precious metal is experiencing long-term growth. Consequently, commodity experts predict that silver prices will continue to rise.
Silver prices opened at $31.71 per ounce on Wednesday, reaching a high of $32.30 in the past 24 hours, and have risen 32.51% year-to-date. In contrast, gold prices have increased by “only” 14% this year.
On Tuesday, Daniel Ghali, Senior Commodities Strategist at TD Securities, stated that silver is the most exciting energy transition investment theme among today’s commodities. In his view, driven by the rapid development of the global solar industry and the trend of increasing electronic integration, especially in automobiles, the silver market is already recognized as being in structural deficit.
The “2024 World Silver Survey,” commissioned by the Silver Institute and completed by Metals Focus, an independent precious metals consultancy based in London, pointed out that industrial demand for silver grew by 11% in 2023 to 654.4 million ounces, reaching a record high, with photovoltaic industry demand for silver increasing by 64%, exceeding expectations.
While demand remains robust, the supply outlook for silver is concerning. Ghali stated that the recent rise in silver prices is due to historically insufficient investment in primary silver mines, which has triggered supply concerns in the market. He noted that silver is mainly mined as a byproduct of lead and zinc mines, copper mines, and gold mines, with few companies specializing in silver mining. Consequently, this structural underinvestment in mining has led to the current structural supply shortage of silver.
The Silver Institute stated in January that global silver demand would exceed supply for the fourth consecutive year in 2024.
Recently, “substantial” above-ground inventories have alleviated concerns about supply shortages. However, Ghali expects this situation to change. In his view, if you look at silver that is genuinely available for purchase, global silver inventories are likely overestimated, and this condition may cause considerable extreme price fluctuations in the silver market.
