Investment silver demand grew 10% in the first half of 2020

Investment silver demand grew 10% in the first half of 2020

The first half of this year revealed the value of silver as a haven. The demand for investment in silver has increased by 10% compared to the same period in 2019. Silver saw an increase in purchases of silver bullion and coins and registered record figures in metal-related investment products, such as ETPs.

According to the recent report from the Silver Institute, the investment demand for the metal increased by 10% compared to the same period last year.

During the first six months of the year, the average silver price was $16.65 an ounce. Mid-March registered a significant drop in the prices of the metal. However, it recovered and rose 56% to $17.84 an ounce at the end of June and exceeded $18 soon after. 

The gold/silver ratio, which measures the number of ounces of silver needed to acquire one of gold, registered its historical maximum in March, with 127 points. It fell to 97.8 at the end of June. According to the Silver Institute, this level indicates that silver is still undervalued compared to gold.

The amounts accumulated by silver ETPs have been at their highest in history, at 925 million ounces (28,770 tons), which is approximately equivalent to the global 14-month supply.

As for physical silver, bullion sales have grown close to 60% year-on-year. However, there has been a shortage of the commodity due to investors’ interest in buying physical silver in any form. 

The demand for coins and bars has been tremendous. Many traders ran out of stock between March and April. 

 

Industrial and jewelry demand for silver

As expected, the Covid-19 pandemic has hurt non-investment silver demand. For example, the industrial market contracted between March and April due to the paralysis of economic activity. However, it has been reactivated since May, with the reopening of most countries.

As the report points out, the fall in consumer confidence and the rise in unemployment have impacted the demand for silver by sectors such as those dealing in automobile and electronic products.

The Silver Institute trusts in the reactivation of this sector thanks to the infrastructure investment programs launched by various governments. They will have a positive impact on the industrial demand for silver.

As for the silver jewelry sector, the report reports that it is better than the other precious metals. Its prices are more affordable, and it has a higher capacity for online sales.

Metals Focus, British precious metals consultancy firm, forecast an annual drop of just 7% in silver manufacturing, compared to the 25% expected for gold.

The data on imports into the United States indicates this recovery. Silver jewelry imports have improved their records from 65% in April to 41% in May. Meanwhile, gold jewelry imports have dropped 91% in April and 81% in May.

To complete this optimistic picture, data from a survey conducted by The Silver Institute revealed that 64% of consumers interviewed planned to buy jewelry shortly. In fact, more than 50% of those said they would buy silver jewelry.