WASHINGTON, Feb. 12 28, 2020 (GLOBE NEWSWIRE) — The Silver Institute believes macroeconomic and geopolitical conditions will remain broadly supportive of precious metals, encouraging investors to remain net silver buyers overall, a development that should drive silver prices higher this year. . Additionally, we are seeing continued growth in physical silver investments and expect the use of silver as an industrial metal to increase in 2020.
However, there will be times when silver will have to deal with issues, such as the current health crisis in China, which could hit that country’s economy hard.
As such, the Silver Institute provides the following information on silver market trends in 2020.
Become thin industrial money levy (accounting for just over half of total demand in 2019) is expected to recover in 2020, reversing two years of marginal losses. While weak economic conditions, particularly in China, remain a drag on industrial production, a repeat of last year’s destocking along the supply chain (due to the trade war) is unlikely. The reloading of this pipeline should provide an additional boost to demand this year. We forecast a 3% increase in industrial demand for silver, which would be broadly in line with the International Monetary Fund forecast of 3.3% for global GDP growth this year.
Demand from the electrical and electronics sector should account for most of the gains. The use of silver in the automotive industry, for example, is expected to experience impressive growth. Despite weak global car sales, silver demand should benefit from the increasing sophistication and electrification of vehicles. The use of silver in 5G infrastructure and upcoming smart electronics is also expected to fuel demand gains.
The outlook for the photovoltaic (PV) sector appears mixed. Continued government support for renewable energy to combat climate change and falling prices for finished PV modules are expected to boost global PV installations. However, the actual consumptions of silver could be offset by continued efforts to reduce silver loads. Overall, silver demand in the PV sector is expected to decline slightly, but even so, the total will remain near record highs.
Global Jewelry demand is expected to maintain modest growth this year. India remains the main driver of growth, driven by the continued penetration of 925 sterling jewellery, which is more commonly sold in the urban areas of this country. In the United States, silver jewelry consumption is expected to remain healthy, thanks to stronger online sales. A marginal increase is also planned for silverware production this year. Like jewellery, the growth of this segment will depend almost entirely on India.
Cash holdings exchange traded products (ETP) should remain high in 2020. Profit taking on ETP should be limited, even with rising prices. These holdings tend to be relatively sticky, reflecting the importance of retail investors in this market, who often take a longer investment horizon than many short-term professional investors. At the same time, lingering macro uncertainties should also favor safe-haven assets, which will encourage new allocations to silver ETPs.
Physical investment in silverwhich consists of purchases of silver coins and bullion, is expected to increase for the third consecutive year, up around 7% in 2020. This partly reflects a continued recovery in Western markets where improving expectations in price matter and rising price volatility will prompt new purchases.
silver mine production is expected to rise 2% in 2020, making it the first annual increase in five years. This growth will be due in part to the contribution of several recently commissioned mining operations and the ramping up of several mine expansions to full production.
Silver Scrap Supply is expected to increase for the fourth consecutive year, albeit slightly, due to continued capacity expansion in the ethylene oxide market. Rising metal prices could also boost jewelry and silverware scrap in price-sensitive markets, such as India.
the money market is expected to end this year with a structural surplus (total supply minus total demand) of around 15 million ounces. At this level, the surplus would be the lowest in five years.
Silver saw a noticeable improvement in investor sentiment in 2019, pushing the average annual price of silver to its first increase in four years, up 4% to $16.21 (based on the price of money from the London Bullion Market Association). The rise in prices was supported by a marked shift towards looser monetary policies as concerns grew over the global economic outlook, exacerbated by the ongoing trade war between the United States and China.
The outlook for silver remains positive, with the annual average price expected to rise 13% to a high of $18.40 in 2020. This rally is primarily driven by a positive pass-through from gold’s gains as the yellow metal continues to benefit macroeconomic and geopolitical uncertainties in critical economies. Worries about the state of the global economy will have possible negative consequences for industrial metals and, by extension, silver. However, the weight of institutional silver flowing into a relatively small market should prove sufficient for silver to outperform gold, and could send the gold:silver ratio plummeting into the mid-70s later this year.
Metals Focus, the respected global precious metals research consultancy, contributed to this analysis. The company will research and produce the 30and edition of the Silver Institute’s annual report on the international silver market, World money Survey. This report will be published on April 15, 2020.