Silver Market Heads For Largest Deficit In Decades – Silver Institute

Global demand for silver is expected to increase by 16% in 2022 to reach 1.21 billion ounces, creating the largest deficit in decades, based on a report by the Silver Institute on November 17.

The use of silver by industry, for jewelry and silverware, and bars and coins for retail investors were all projected to reach record levels, as highlighted by the Institute.

Automakers are now using more silver as the number of electronics in vehicles increases, but the industry accounts for just about 5% of total demand. Solar panels account for about 10% of silver demand.

Demand in India nearly doubled this year as the buyers took advantage of the low prices to replenish their stockpiles drawn down in 2020 and 2021.

Exchange-traded funds (ETFs) storing silver for the investors shrank, nonetheless, returning metal to the market. However, the Silver Institute does not count ETFs as physical demand since they just store wholesale silver bars and do not rework them.

The Silver Institute projected a deficit of 194 million ounces this year, up from just 48 million ounces in 2021. Philip Newman at consultants Metals Focus is convinced that demand is probably going to fall next year. Metals Focus prepared the Silver Institute’s numbers. Newman said:

“India’s restocking is likely to trip over into 2023 but at some point will dissipate. By extension, you could see some decent figures in 2023 but it may not match 2022.”

Newman also said that he expects strong demand from sectors like solar panels and automakers. Hence, as the world goes green, there will be more silver supply deficits in the coming years, although not as huge as in 2022.

The total amount of silver stored in vaults in London and New York monitored by the COMEX exchange and the London Bullion Market Association has dropped by nearly 370 million ounces (25%) in 2022. But Newman stated that there was plenty of silver left.

“You do have still sizeable stocks. I don’t think that’s a concern.”

Silver prices have dropped by around 10% in 2022 to trade at $21 per ounce, mainly due to the financial investors selling silver to respond to rising US bond yields and a strengthening dollar. The following are numbers for 2022 and comparisons.

SILVER DEMAND (MILLIONS OF OUNCES)

*Source: The Silver Institute, Metals Focus