Due to geopolitical tensions, recession concerns in key economies, and seasonal demand, silver prices rebounded from a two-year low.
Among precious metals, silver had the worst year in 2022. It has lost more than 13 percent since January due to a stronger dollar, rising interest rates, and weak industrial demand.
During economic and political uncertainty, gold and silver are usually considered safe havens. In recent years, gold prices have rallied to record highs, but silver has traded flatlines. Professional investors have been less interested in silver because of this.
Due to a smaller market, lower market volatility, and fluctuations in industrial and investment demand, silver prices have historically been extremely volatile.
Silver hit an all-time high in 2011 of $49 per ounce on the international market. However, weak fundamentals caused it to drop to $11 by March 2020. As a result, the metal’s safe-haven demand has risen again to $30 an ounce, but lost momentum later. At the moment, geopolitical and economic uncertainty is reigniting the metal’s popularity.
A weak domestic currency and widespread demand for silverware and ornaments on the domestic market kept silver prices steady. In India, silver can be used as a substitute for gold when making utensils and jewelry.
As countries around the world move towards greener economies, investment in decarbonization and electrification projects has continued to increase. Silver is an integral part of many green technologies. In addition to renewable energy solutions, silver loadings are also high for the electrification of electric vehicles. These new and emerging applications are providing structural support for the metal.
According to Silver Institute data, industrial silver demand grew by 9 percent last year, the highest level since 2010. The resumption of industrial activities and the reopening of businesses following the pandemic-related lockdown largely contributed to the positive sentiment. The largest volume came from coin and bar purchases, followed by industrial purchases.
Recycling and mining activities have improved significantly since the pandemic-related disruptions in 2020. Silver output has also risen by 5.3 percent in the past year.
As a result, contrasting forces continue to dominate the market outlook. Investment and industrial demand continued to be low.
Investment demand is less likely to be affected by factors such as geopolitical tensions and currency movements. However, new and emerging industry demand may be able to support prices.
By Orlando J. Gutiérrez