Silver Continues To See Positive Broad-Based Demand – Silver Institute
New York (July 28) Despite the recent price weakness, there is still a lot of potential for silver as the market continues to see broad-based demand, according to the Silver Institute.
However, the institute does see some potential for silver prices to regroup from recent losses noting that that the gold:silver ratio averaged 73 in the first half of 2015, well above the 15-year average of around 58.
According to the latest report released by the nonprofit association, this indicates “silver is underpriced relative to gold.”
“This gives way to increased potential for buying in the silver market,” the institute explained.
The report said that consumer demand for silver jewelry was particularly strong as jewelry imports in the U.S. increased 11% through the end of May; while, imports from Thailand and China increased 18.5% and 14%, respectively, during the first five months of the year.
“GFMS Thomson Reuters (GFMS), the precious metals consultancy, estimates that globally silver jewelry will grow 5 percent in 2015,” the report said.
Silver also continues to see strong industrial demand. The institute noted that silver use in the renewable energy sector, as the metal is a key component in solar panels, is expected to increase 8% this year to 65 million ounces.
“The increase is due to the U.S., which had a 76 percent increase in solar installations in the first quarter of 2015 when compared to last year,” the report said.
The report also highlighted that while silver demand remains positive, the metal is expected to see a growing supply deficit of around 57.7 million ounces, the third consecutive yearly deficit.
Probably one of the most noticeable differences between gold and silver has been in investor demand. Despite a strong start to the year, gold held in trust in physically-backed exchange-traded funds are now negative on the year, as investors outflows increased in June.
However, the institute noted that global silver ETF holdings have increased by more than 4.7 million ounces as of July 24, “indicating that these investors likely have a more positive longer-term view of the silver price.”
Despite a slow start to the year, the institute has also noticed a pickup in silver bullion demand. In late-June, the U.S. Mint sold out of its 2015 American Eagle silver coins, as it was caught off guard when sales picked up after prices dropped below $15 an ounce. The U.S. Mint resumed sales of its silver bullion coins on Monday on an allocated basis.
The institute noted that global coins sales in the first half of the year was down about 6% compared to the same time period last year; however, sales were still the fifth highest on record.