Macroeconomic and geopolitical conditions will remain broadly supportive for precious metals, encouraging investors to remain buyers of silver, a development that should lift silver prices higher this year, according to officials of the Silver Institute.
The Institute provides the following insights on 2020 silver market trends.
The Silver Institute foresees a 3 percent increase in silver industrial demand, which would be broadly in line with the International Monetary Fund’s forecast of 3.3 percent for global GDP growth this year.
Growth in silver industrial offtake, accounting for just over half of total demand in 2019, is expected to resume in 2020, reversing two years of marginal losses.
Demand from the electrical and electronics sector should account for the bulk of the gains. Silver use in the automotive industry is expected to enjoy impressive growth. Silver use in 5G-infrastructure and upcoming intelligent electronics is also likely to fuel demand gains.
Overall, silver demand in the photovoltaic (PV) sector is forecast to edge slightly lower, but even so, the total will remain close to record highs.
Global jewelry demand is forecast to maintain modest growth this year. India remains the dominant growth driver, led by the ongoing penetration of 925 sterling jewelry, more commonly sold in that country’s urban areas.
Holdings in silver exchange-traded products (ETPs) are forecast to remain elevated in 2020. Profit-taking in ETPs is likely to be limited, even with a price rally. Continued macroeconomic uncertainties should also favor safe-haven assets, which will encourage new allocations into silver ETPs.
Silver physical investment, which consists of purchases of silver bullion coins and bars, is forecast to increase for the third year in a row, up by around 7 percent in 2020.
Silver mine production is anticipated to grow by 2 percent in 2020, which would make it the first annual increase in five years. This growth will be partly due to the contribution from several recently-commissioned mining operations and from the ramp-up of several mine expansions to full production.
Silver scrap supply is projected to rise for the fourth consecutive year, albeit by a small amount, a reflection of the ongoing capacity expansion in the ethylene oxide market.
Silver experienced a notable improvement in investor sentiment in 2019, boosting the average annual silver price to its first increase in four years, up 4 percent to $16.21.
The outlook for silver remains positive, with the annual average price projected to rise by 13% to a six-year high of $18.40 in 2020.
This rally is premised mainly on a positive spillover from gains in gold, as the yellow metal will continue to benefit from macroeconomic and geopolitical uncertainties across critical economies. The weight of institutional money flowing into a relatively small market should prove sufficient for silver to outperform gold and could cause the gold:silver ratio to drop to the mid to high-70s later this year.
Global precious metals research consultancy Metals Focus contributed to this analysis. The firm will research and produce the 30th edition of the Silver Institute’s annual report on the international silver market, World Silver Survey. That report will be released on April 15, 2020.
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GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)
04-Mar-20 1644.80 1641.85, 1286.73 1281.63 & 1475.06 1477.83
03-Mar-20 1599.05 1615.50, 1249.98 1260.25 & 1438.03 1446.03
02-Mar-20 1609.70 1599.65, 1258.79 1251.41 & 1451.47 1437.29
28-Feb-20 1626.35 1609.85, 1262.37 1254.88 & 1474.61 1468.18
27-Feb-20 1646.60 1652.00, 1278.58 1282.45 & 1505.32 1504.97
26-Feb-20 1647.95 1634.90, 1273.37 1264.76 & 1515.45 1505.42
25-Feb-20 1655.90 1650.30, 1275.54 1271.39 & 1528.06 1522.73
24-Feb-20 1682.35 1671.65, 1304.49 1293.69 & 1555.84 1540.26
21-Feb-20 1633.70 1643.30, 1264.81 1269.12 & 1512.48 1515.29
20-Feb-20 1610.35 1619.00, 1250.11 1258.45 & 1491.99 1496.77