Global silver demand forecast to rise 11% in 2021: Silver Institute

Silver 1 oz. coins. Credit: AK2/iStock.

The following is a release by the Silver Institute, a Washington, D.C.-based non-profit association that draws its international membership from across the breadth of the silver industry, including silver miners, refiners, bullion suppliers, manufacturers of silver products and wholesalers of silver investment products. For more information, visit

Against an improving macroeconomic backdrop, the main segments of silver demand are expected to rise this year. Led by industrial and physical silver investment, global silver demand is expected to achieve an eight-year high of 1.025 billion ounces in 2021.

Physical investment, which covers silver bullion coin and bar purchases, is expected to achieve a six-year high in 2021 of 257 million ounces, as investors continue to add silver to their investment holdings.

However, should the global economic recovery from the pandemic prove to be much slower than expected, this could weigh on base metal prices. This in turn could encourage investors to reduce their exposure to silver.

On balance though, the Silver Institute remains especially optimistic about silver’s prospects for this year, reflected in the following insights for 2021.

Silver Price and Investment

The recovery in the silver price, which first emerged in 2019, continued last year. As a result, the average annual silver price rose from US$16.19 in 2019 to US$20.52 last year, a 27% increase (basis the London Bullion Market Association silver price). With the onset of the Covid-19 pandemic, the market saw an increasing number of countries introduce looser monetary policies. This helped drive down real interest rates and, together with a rotation in favor of safe-haven assets, encouraged investors to buy into silver and other precious metals.

A bullish mood for silver has been witnessed in the opening weeks of 2021. In early February, a jump in retail investor appetite for silver, spurred on by social media platforms, pushed the price to an eight-year high of US$31.10, while the gold:silver ratio fell to 62, a seven-year low.

Going forward, the outlook for the silver price in 2021 remains exceptionally encouraging, with the annual average price projected to rise by 46% to a seven-year high of US$30.00. Given silver’s smaller market and the increased price volatility this can generate, we expect silver to comfortably outperform gold this year.

Additionally, the gold:silver ratio is expected to fall from an annual average of 86 in 2020 to around 68 in 2021. This will be even more noteworthy given that the ratio touched a record daily high of 127 in March 2020.

Turning to investment, global holdings in ETPs grew by an impressive 331 million oz. to end 2020 at 1.04 billion ounces, and since then, global ETP holdings have continued to escalate. Through February 3, ETP holdings rose 137.6 million oz. to a new record level of 1.18 billion ounces.

Further upside is expected this year for physical investment, which is anticipated to rise to a six-year high of 257 million oz., though short of the record high level of over 300 million oz. achieved in 2015. This projection reflects current demand in the all-important U.S. market, which has enjoyed a robust start to 2021, with overwhelming demand causing product shortages. As such, these gains should offset a relatively weak Indian market.

Silver Demand

The outlook for silver demand is bright, with the global total forecast to achieve an eight-year high in 2021 of 1.025 billion ounces, thereby recovering all losses sustained in 2020. This reflects expected gains in the critical segments of industrial demand, physical investment, jewelry, and silverware fabrication.

Industrial demand is projected to post a four-year high in 2021 of 510 million oz., a 9% increase over 2020 figures. Demand from the electrical and electronics sector is poised to account for the bulk of the gains. With the growing penetration of 5G technology in consumer electronics this sector is expected to drive notable gains for silver offtake, with a 7% increase over 2020 to 300 million oz. for silver’s use in the sector.

The PV sector staged a strong recovery in the second half of 2020, and this momentum should carry through 2021. The global total for the sector is forecast at 105 million oz. in 2021, overcoming the losses sustained last year.

Although silver loadings continue to drift lower, the sector will benefit from a growing number of countries that are installing new PV capacity. Silver’s use in the automotive market should also rebound strongly in 2021, to just over 60 million oz., benefiting from the growing electrification of vehicles.

Global jewelry demand is forecast to rebound to 174 million oz. but remain below pre-Covid levels. To a large extent, this reflects only a modest recovery in India, where demand will be affected by high and volatile rupee silver prices. A similar outcome emerges in silverware, which is dominated by the Indian market. Even though total silverware fabrication is predicted to achieve a double-digit percentage gain this year, reaching 45 million oz., the global total will remain considerably short of 2019 levels because of the challenges in India.

Silver Supply

Silver mine production output should recover and rise from the pandemic-affected 2020 level, achieving a double-digit gain this year to 866 million oz., which would be the highest total since 2016. Most mines affected by Covid restrictions have re-started, with the recovery also benefiting from the re-opening of key mines affected by strike actions. Growth will also be driven by higher output from primary silver mines and by new projects in Mexico and Australia.

Silver scrap supply is expected to rise for the fifth consecutive year, due in part to the strength in gold and silver prices, which will encourage industrial recycling. Jewelry and silverware recycling are also forecast to rise this year.
Although the silver market is projected to achieve a physical surplus in 2021, it should be the lowest since 2015’s deficit.


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