Silver ETFs could shine in 2022 on record demand
Silver-related ETFs shine as prospects for silver demand look bright.
Among Friday’s top-performing unleveraged ETFs were the ETFMG Junior Silver Miners ETF (NYSEArca:SILJ) advanced 5.5%, and the Global X Silvers Miners ETF (NYSEArca:SIL) increased by 4.6%.
Meanwhile the Aberdeen Standard Physical Silver Shares ETF (SIVR) advanced 1.3%, and the iShares Silver Trust (SLV)increased by 1.8%. Comex silver futures fluctuated around $23.5 an ounce.
According to the Silver Institute, the outlook for silver demand in 2022 is “extraordinarily promising,” with global demand expected to increase 8% to a record 1.11 billion ounces, reports MiningWeekly.
Unlike gold, increased demand for silver is being helped by record industrial manufacturing, which could improve by 5% as the metal is used in both traditional and critical green technologies. For example, the institute estimated that record installations of photovoltaic solar panels will push silver demand in this segment to an all-time high this year.
Additionally, demand in the automotive and 5G-related industries is expected to remain robust despite ongoing global semiconductor shortages.
Investment demand for physical silver for bullion and bullion could rise 13% in 2022 and potentially hit a seven-year high. Additionally, demand for jewelry and silverware could grow by 11% and 21%, respectively, in 2022.
Meanwhile, on the supply side, total global silver supply is expected to rise 7% to 1.092 billion ounces in 2022, with silver mine production expected to rise 7% this year to a six-year high. Silver recycling is expected to be more modest in 2022 with volumes expected to increase by 3% due to higher industrial recycling.
“In early 2022, gross domestic product growth was downgraded for several major economies, along with rising financial market volatility. This points to an increasing risk that the pace of the US rate hike cycle could be slower than current market expectations allow for. As a result, silver prices should initially benefit from renewed investor interest in precious metals. Silver’s high beta should also see it outperform gold, with the gold:silver ratio expected to drop below 70 by year-end,” according to the Silver Institute.
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