Silver is a unique commodity in that its demand is sourced from both its investment appeal and its use for industrial purposes. Similar to gold, silver's investment appeal lies in its centuries-long track record as a global store of value. As a result, the silver price tends to have a relatively high correlation to gold with investor interest driven by its 'safe haven' status particularly as it relates to geopolitical uncertainty, currency devaluation by central banks and as a hedge against inflation. On the industrial side, silver's unique qualities, such as its remarkably high conductivity and ductility, make it an essential component in electric vehicles, solar energy and energy storage. The shift to a greener future is expected to underpin strong growth in industrial demand for silver for decades to come.
The Outlook for Silver
The supply side for silver is expected to be relatively flat with mine production forecast to remain around 800 Moz of silver over the medium to long term. Most of the largest silver producing mines are underground operations where typically it is challenging to increase mining rates. There are also relatively few large undeveloped silver deposits globally.
Meanwhile, demand for silver is expected to continue to grow. Despite market volatility due to various factors such as the Russia-Ukraine conflict, rising interest rates and inflation, the outlook for silver is promising. The growth in green energy initiatives could lead to long-term sustainable demand for silver. In addition, post-pandemic conditions are likely to drive demand for industrial fabrication, consumer goods, jewelry and silverware.
Further information on the supply and demand outlook for silver can be found at the link below: