Driven by the rising gold prices and stimulated by industrial demand, silver prices have surged to the historical highs not seen in nearly a decade.
In terms of industrial demand for silver, photovoltaics (PV) is a major consumer. According to the World Silver Institute, global silver demand for PV reached 6,017 tons in 2023, further increasing its share to 16%. China holds a dominant position in the photovoltaic industry. During the period from January to May 2024, the amount of silver delivered to the Shanghai market reached 1,663 tons, and analysts expect this figure to reach 3,992 tons this year.
A Canadian research report on photovoltaics indicates that over the past decade, PV silver demand has grown tenfold. The study predicts that the annual growth rate will only be 10% until 2030, but by 2030, the silver consumption in photovoltaics is expected to reach 880 million ounces. This means that the silver consumption of the photovoltaic industry alone will exceed the total mined output by that year.
While industrial demand, particularly from the PV sector, is soaring, the supply of silver has remained stagnant or even decreased. The silver market has experienced a supply deficit every year in the past six years. Additionally, a project-by-project analysis of mining companies’ balance sheets shows that this year’s planned production will not be achieved. From 2024 to 2030, silver mining output is expected to continue declining, with the most optimistic predictions only maintaining the current levels. The world’s largest silver producer, Mexico, is expected to deplete its underground silver reserves within the next two years, and China will likely run out in only ten years.
SRSrocco estimates that total silver demand from all industries will reach 1.55 billion ounces, resulting in a deficit of nearly 700 million ounces. Even accounting for the theoretical above-ground inventories in London, New York, and Shanghai, this deficit will not be filled in 2025 and 2026. Meanwhile, silver inventories at exchanges have plummeted to recent lows. For instance, the Shanghai Futures Exchange (SFE) saw its silver inventory fall from 3,200 tons in January 2021 to 684 tons on June 20, 2024.
Given this fundamental industry backdrop, silver prices have already initiated a significant upward trend. Technically, silver prices may accelerate rising in the short term.
From 2009 to 2011, silver prices exhibited Livermore’s accumulation cylinder with widening mouth, ultimately breaking through the resistance of the previous three highs and surging to $50. However, during the period from 2009 to 2010, silver prices took 12 months to form three highs, whereas this time it has taken only four months to set four new highs.
According to this technical analysis logic, the next high for silver prices in the coming weeks is expected to be around $36.
