5 Silver Market Trends to Watch in 2019

The Silver Institute has released its silver market trends for 2019, noting that the silver market should be more in demand this year, as volatility in the equity markets is encouraging investors to look for safe havens such as precious metals, which will boost silver investment.

The beginning of 2019 has already proven to be positive for silver investors, as the precious metal recently broke free of the US$16 barrier and the US Mint has already sold 12 percent more American Eagles in January compared to the previous year.

The Investing News Network has rounded up five highlights that the Silver Institute is expecting from silver demand in 2019.

1. Silver demand from industrial fabrication will rise

With industrial fabrication responsible for approximately 60 percent of total demand, the institute is expecting demand from brazing alloys and solders, as well as electrical and electric applications, to rise again this year. 

“This is on the back of continued demand from the automotive sector, which uses an increasing amount of applications, such as safety features, window defogging and infotainment systems, and for electric and hybrid vehicles,” the report stated.

The report also forecast growth from the white metal’s use in a variety of additional sectors, such as water purification, chemical applications, LED lighting, flexible electronics and screens as well as anti-microbial applications in textiles.

2. Photovoltaic will continue to support silver demand

Photovoltaic (PV) has notably expanded in recent years due to several countries looking to diversify their energy portfolio away from conventional fossil fuels and towards a higher share of renewable sources.

“PV demand will still be very supportive of silver usage, as many governments will continue to provide incentives to install more solar power,” said the Silver Institute.

In fact, global solar capacity additions are likely to be above 100 gigawatts per year over the 2018-2022 period. India, Australia and various European countries are expected to lead the solar energy charge.

3. Jewelry demand to be supported by Thailand

While the report notes that India will continue to be one of the largest consumers of silver, Thailand is “set to be one of the driving forces behind the rise,” the institute said.

The US will also be a catalyst for silver jewelry demand as it will remain a popular and cost-effective alternative to lower carat gold items.

Jewelry made from the white metal will continue its expansion in 2019, thanks to its variations in design, fine quality and superb retail margins.

4. ETPs to increase by 8 million ounces

Exchange-traded products (ETPs) are expected to climb by 8 million ounces this year.

“Silver-backed ETPs are “stickier” than other precious metal products, as a majority are held by retail investors, rather than institutional investors, the report revealed.

5. Physical investment to tick up by 5 percent

Thanks to strong US bullion coin demand during January of this year, silver physical investment demand is forecast to increase by at least 5 percent during 2019.

The Silver Institute also expects demand in Europe, which rose by 6 percent last year, as well as India to be supportive of global growth throughout this year. The report notes that while bullion coin demand in the US fell last year, non-bullion silver coins rose for the second consecutive year by 42 percent.

Supply

Although silver mine production is expected to decline by 2 percent this year, silver scrap supply is forecast to pick up modestly, following four consecutive years of stable scrap flows.

“That will be mainly a function of scrap generated from industrial processes but also from jewelry items, which tend to be strongly price elastic,” said the Silver Institute.

This year’s silver market balance, which is total supply less total demand, is projected to be the third consecutive year where all the silver produced is absorbed by the various downstream sectors.

Finally, the institute expects that the white metal price will average around US$16.75 in 2019, which is a 7 percent increase over the 2018 average price.

As of 4:30 p.m. EST on Tuesday (February 5), silver was trading at US$15.83.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.