After a strong 2021, demand for silver is expected to hit a record high in 2022, according to the Silver Institute’s Global Demand Forecast.
The Silver Institute projects silver demand will hit a record 1.112 billion ounces this year with growth in most key areas. That would represent an 8% year-on-year increase.
A surge in industrial demand, particularly in the green energy sector, will help drive overall demand higher. Industrial fabrication is expected to expand by about 5%. Industrial offtake accounts for about half of total silver demand.
Ongoing improvements in the global economy will give silver industrial applications an additional boost, mitigating near-term headwinds from supply chain bottlenecks and the challenges in certain regions from the ongoing COVID pandemic.”
The use of silver in the solar energy sector will continue to expand as governments strive for carbon neutrality. Demand in the solar sector is expected to hit an all-time high in 2022.
The outlook for silver demand in automotive and 5G-related applications also looks to remain robust this year. Silver demand in the auto industry has been underpinned by increasing vehicle electrification, which leads to higher silver loadings per vehicle.
Investment in physical silver is expected to chart double-digit gains this year and hit a 7-year high.
As the year advances, ongoing macroeconomic uncertainties, and elevated inflationary pressure, should encourage retail investors to seek physical silver for wealth preservation. Accordingly, profit-taking is likely to remain muted. Physical silver investment in India is also expected to strengthen on the back of improving economic conditions and positive price expectations.”
Silver ETFs saw a 6% rise to 1.132 billion ounces last year. So far in 2022, silver ETF holdings are little changed from year-end 2021 and remain close to record highs. The Silver Institute says this position should be maintained for much of this year.
Silver jewelry demand is forecast to strengthen by 11% this year. India remains the driving force in the silver jewelry market. Improving consumer sentiment in that country should drive sales higher. The expansion in silver jewelry sales in the US is also expected to continue in 2022, after a strong rebound last year.
Silverware fabrication is forecast to expand by 21% this year. India will account for the bulk of the increase in demand for silverware in line with increased jewelry demand.
The silver-gold ratio is over 78-1. This indicates that silver is historically undervalued compared to gold. To put that into perspective, the average in the modern era has been between 40:1 and 50:1.
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