According to the Silver Institute's latest World Silver Survey, global demand for silver reached a new record high of 1.24 billion ounces last year, resulting in a significant supply deficit.
The report stated that in 2022, the silver market was undersupplied by 237.7 million ounces, which the Institute called "possibly the most significant deficit on record." The report also indicated that this undersupply, coupled with a 51.1 million ounce shortfall in 2021, had wiped out the cumulative surpluses of the previous decade. The Institute predicted that there will be a further undersupply of 142.1 million ounces this year, and moving forward, there will be ongoing deficits in the market.
Metals Focus, a consultancy that prepared the data for the Silver Institute, stated that although visible silver inventories are decreasing, the large amounts of metal held by individuals and investors could fill supply gaps. Despite this, silver prices have mostly decreased since 2020 as interest rates have risen, deterring investment in precious metals, which do not offer interest. The Silver Institute predicts that silver should average $21.30 an ounce this year, below last year's average of $21.73.
The report also revealed that demand for silver rose to record highs from all major users, including jewelers, industry, and buyers of silver bars and coins. Silver is used in numerous industries, including electronics and solar panels, and demand is growing as the world moves away from fossil fuels. India imported significant amounts of silver last year, but demand there is expected to decrease somewhat in 2023. In the long run, Metals Focus predicts that "there is not a great deal of movement (in silver supply), whereas on the demand side we generally have that doing quite well... industrial demand in particular." Photo by Unit 5, Wikimedia commons.