Jul 10, 2020

Silver Investment Demand Up 10% In H1 2020

Investors flocked to silver-backed exchange-traded products and silver bullion coins in the first half of this year, according to a report released by The Silver Institute, an association of silver producers, refiners, manufacturers and dealers focused on promoting the metal.

Investors actively accumulated silver in the first six months of the year, leading to a 10%  gain in investment demand. Paving the way was remarkably strong growth in silver-backed exchange-traded products (ETPs), which have posted successive all-time highs this year, together with solid silver coin and bar investment.

The silver price averaged $16.65 through to the end of June. Having fallen sharply in mid-March, the silver price has since recovered strongly, rising by 56% to reach $17.84 at end-June; it has since broken through the $18 barrier. Retail and institutional inflows into silver ETPs have been impressive this year. As of June 30, global holdings reached a fresh all-time high of 925 million ounces (Moz), which is roughly 14 months of mine supply.

Retail bullion coin sales jumped by an estimated 60% year-on-year. Silver bar and coin sales surged in response to a deteriorating economic outlook linked to the global Covid-19 pandemic, leading to some supply-chain disruptions.

Looking ahead, silver jewellery is expected to weather the storm far better than other precious metals this year. This is due to the relative affordability and greater suitability to online selling of silver jewellery. Metals Focus, the independent precious metals consultancy, forecasts an annual decline for global silver jewellery fabrication of just 7% against a projected 25% slump for gold.

Michael Barlerin, director of the Silver Promotion Service (SPS), an arm of the Silver Institute focused on stimulating demand for silver jewellery in major international markets, stated, “In June, we commissioned a consumer research survey where respondents were asked to evaluate pent-up consumer demand due to the Covid-19 pandemic. The results were very positive, with 64% of consumers surveyed saying they were planning to purchase belated jewellery gifts and over 50% indicating it would be silver jewellery.”

Credit: The Silver Institute