The forgotten precious metal – ShareCafe
Silver is the poor man’s precious metal, overshadowed by the shinier gold and left behind by platinum and palladium as its increasing industrial use has caused demand to outperform supply and prices to boom rapidly.
Both platinum and palladium face an uncertain future as electric vehicles of all kinds replace internal combustion engine vehicles (ICVs) where they are used extensively in exhaust systems as catalysts in both internal combustion engines and hybrids, which should ensure solid demand for the next decade .
Both thoughts are in greater demand as the hydrogen revolution shifts from thought bubbles to actual production, consumption, and demand.
So what is the outlook for silver, a metal that global demand estimates say has been forgotten for several years.
Silver is more of a by-product of lead, zinc or copper mining in Australia – in the north of Queensland, for example, the huge Mount Isa mining complex is owned by Glencore, where lead, zinc and silver are mined.
Nearby Cannington (S32) is mostly a silver mine and nearby Ernest Henry (bought by Evolution last week) is a copper, gold and silver mine. There are smaller mines like the Tritton copper and silver mine in NSW (with potential expansion being considered) and Dugald River (Queensland) and Golden Grove (WA).
The great foundation of Australian mining – Broken Hill – was a fabulous array of lead, zinc and silver mines that formed the basis of BHP, Rio Tinto and S32, among others.
The Silver Institute sees demand this week at 1.29 billion ounces this year, surpassing the billion-ounce mark for the first time since 2015.
The bullish demand outlook comes as the silver price travels up again. December’s Comex silver price was last traded at $ 23.496 an ounce on Thanksgiving, down $ 1.7 an ounce last week as gold fell back below $ 1,800 an ounce level.
It is as if gold has taken a blow on worries about rising inflation. Silver also benefits from being a cheaper way to invest in precious metals than gold, which rose to over $ 2,000 an ounce in August 2020. Silver exceeded $ 27.50 an ounce.
The Silver Institute said silver demand had grown broadly through 2021, with industrial demand leading the way.
âThe recovery of industrial silver demand from the pandemic will cause this segment to hit a new high of 524 million ounces (Moz). Regarding some of the key segments, we estimate that photovoltaic demand increased 13% to over 110 million on behalf of the Silver Institute.
The report also noted solid investment demand, with interest in physical bullion expected to surge 34%, or 64 million ounces, to 263 million ounces, a six-year high.
âThe growth started with the social media frenzy before spreading to more traditional silver investors. Indian demand reflects the improved sentiment towards the silver price and a recovering economy. Overall, physical investments in India are forecast to almost triple this year after collapsing in 2020, âanalysts said.
Paper demand for silver is also expected to increase in 2021. Holdings of silver-backed exchange traded funds are expected to increase by 150 million ounces.
âDuring 2021 and through November 10, inventories increased 83 million ounces, bringing the global total to 1.15 billion ounces, near the record high of 1.21 billion ounces set on February 2 at the height of the Social media storm took place, âanalysts said.
The report said silver jewelry and silverware manufacturing is expected to recover partially from 2020 low levels, up 18% and 25%, respectively.
“Both markets will benefit from a significant upswing in all major countries, especially India, as the economy and consumer sentiment recovered faster than expected and the restrictions ended in time for the important wedding and festival season,” the analysts said.
On the supply side, Metals Focus said mine production is expected to increase 6% to 829 million ounces.
âThis recovery is largely due to the fact that after forced shutdowns in 2020 due to the pandemic, most mines can operate at full production rate year round.
“The countries where production was hardest hit last year, such as Peru, Mexico and Bolivia, will see the greatest increases,” said the analysts.
Looking at the market supply / demand fundamentals, Metals Focus expects silver to have a modest supply deficit of 7 million ounces. “This will be the first deficit since 2015,” the report said.
On an annual average, Metals Focus expects the price of silver to increase by 24% year-on-year to $ 25.40. That would hit the highest annual average since $ 31.15 in 2012.