The silver market is expected to record a significant structural deficit for the fourth consecutive year.
The global silver market will record a physical deficit in 2024 for the fourth consecutive year. Record industrial demand and a recovery in jewelry and silverware will lift demand to 1.21 billion ounces in 2024, while mining supply will increase by only 1%. Exchange-traded commodities are on track for their first annual inflows in three years, as expectations of Federal Reserve rate cuts, periods of dollar weakness and falling yields have increased silver's appeal as an investment. These are some of the key findings reported by Philip Newman, managing director of Metals Focus, and Sarah Tomlinson, director of mine supply, at the Silver Institute's annual silver industry dinner in New York tonight, which featured historical supply and demand estimates for 2024.
Below are highlights from her presentation:
Silver prices have seen a remarkable rally so far in 2024, touching $35 for the first time since 2012. As of Nov. 11, prices are up 29% since the beginning of this year. Setting aside a brief dip to a three-year low of 73, the gold:silver ratio has largely remained between 80 and 90 so far in 2024.
Global silver demand is expected to rise 1% y/y (y/y) to 1.21 billion ounces in 2024, making it the second highest in the Metals Focus series (which begins in 2010). Most silver demand segments are expected to strengthen this year, led by industrial applications. This leaves physical investment as the only key component of demand to register a significant decline.
Industrial demand is forecast to increase by 7% in 2024 to exceed 700 million ounces for the first time on record. Consistent with the past two years, growth in 2024 has been supported by gains from green economy applications, particularly in the photovoltaic (PV) sector. Higher demand is also expected from the automotive sector, as silver benefits from increased vehicle sophistication, the growing electrification of propulsion systems, and continued investments in infrastructure, such as charging stations. While a challenging macroeconomic backdrop has affected consumer electronics sales, the rapid adoption of artificial intelligence technologies has resulted in a growing need for technology upgrades, replacements and investments in new infrastructure, all of which have helped silver demand.