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(Kitco News) – Silver investors should expect to see a more nuanced market in 2022 as industrial demand is expected to remain strong while investor demand remains relatively flat, according to the Silver Institute’s annual World Silver Survey.
Research for this year’s report was conducted by Metals Focus. In a telephone interview with Kitco News, Phillip Newman, founding partner of the UK-based precious metals research firm, said challenging forces will dominate the silver market throughout the year.
Investors continue to navigate fragile and volatile financial markets created by Russia’s invasion of Ukraine and, at the same time, hedge against the growing threat of inflation, Newman said. Meanwhile, looking at the industrial side of silver, the precious metal faces steady demand as the global transition to green energy progresses. However, the growing threat of stagflation and a possible recession could push demand further.
Putting it all together, Metals Focus expects to see strong silver prices in the first half, with prices reaching a high of $28 an ounce. Newman said he expects prices to average $23.90 an ounce for the year, down 5% from the 2021 average price.
“We expect the silver fireworks to be concentrated in the first half of the year. In the latter part of the year, there is potential for lower inflation and higher inflation. more consistent rates from the Fed. Some investors will take this as an opportunity to liquidate some of their money. This two-way institutional activity, we believe, will weigh on prices, but not drastically.”
While silver investment demand is facing some challenges, Newman said industrial demand for the precious metal will remain strong through 2022. Metals Focus predicts a 5% increase in global silver demand due to new structural advances in industrial manufacturing, which is expected to reach another record high. raised in 2022.
In 2021, silver demand is back above 1 billion ounces. Newman said this could be a new trend for the silver market as nations look to generate more green energy from solar power. Newman added that a slowdown in growth could impact some industrial demand; however, he said the green transition is a trend that is not going away.
Finally, alongside strong demand, Newman said the silver market is on the cusp of a new trend where it could see years of supply shortfalls.
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