In May, silver reached a four-year high, marking a significant structural breakout. This appears to be a genuine breakthrough. Currently, silver benefits from the powerful momentum of gold’s sharp price increases and robust support from the booming new energy sector, with strong demand leading to a noticeable decline in inventory.
At this point in time, if the market speculates on silver, the trend is unlikely to end in just a month or two.
As gold prices continuously rise, silver prices also soar, even outpacing gold. Both gold and silver are precious metals with financial and monetary attributes; hence, the factors driving the increase in gold prices also boost silver prices.
On the macroeconomic front, the unexpected easing of U.S. inflation in April has rekindled market expectations for rate cuts. As the U.S. enters a rate-cutting cycle, the downward trend in interest rates is expected to continually lift precious metal prices, and silver, being highly speculative, exhibits greater price elasticity.
Beyond monetary policy, silver price drivers include geopolitical risks triggering safe-haven demand and continued purchases by central banks globally, particularly in China.
Unlike gold, silver also has significant industrial properties, especially with the development of electronics and clean energy technologies driving long-term demand growth for the metal. On Tuesday, TD Securities’ Senior Commodity Strategist Daniel Ghali remarked that silver is currently the most exciting energy transition investment theme among commodities. According to him, the silver market is already in a state of structural deficit amid the global trends of solar energy and electric vehicles.
In June 2023, President, CEO, and Director of Kuya Silver (CSE: KUYA, OTCQB: KUYAF, FSE: 6MR1) , Mr. David Stein, joined “METALS 100” and provided an update on the company’s two promising projects: Bethania Silver Project in Central Peru & Silver Kings Project in Northern Ontario. When discussing the stock price, he believed that the company’s stock was undervalued, despite a significant decline in stock prices over the past few years, as the company’s fundamentals and growth prospects have improved.
The market has responded accordingly. In 2023, silver prices were relatively flat, rising only 0.66%. However, by May 27 of this year, silver prices had surged dramatically, achieving a 32.93% increase year-to-date.
According to the Metals Focus “World Silver Survey 2024” report, industrial demand for silver grew by 11% in 2023, reaching 654.4 million ounces, a record high, with demand in the photovoltaic industry increasing by 64%, exceeding expectations.
Currently, industrial demand accounts for 55% of total silver demand. Sprott predicts that industrial silver demand will expand over the next few years, driven by three major sectors: the solar industry, the automotive industry (including electric vehicles) and related infrastructure, and artificial intelligence (AI).
The Silver Institute stated in January this year that global silver demand in 2024 is set to exceed supply for the fourth consecutive year.
