The Silver Institute says the London Bullion Market Association silver prices might average $18.40 this year. This would be a 6-year high for this precious metal thanks to industry demands, the current geopolitical climate, and economic concerns.

Versatile Metal

As a versatile metal, silver prices benefit from demand on two main fronts. These fronts include silver as an industrial material, as well as a precious commodity. Silver’s use goes beyond physical investment since a variety of other industries use it. Some of these industries include the automotive industry and the solar panel industry. For example, cars use silver as they become more technologically advanced, so electronics account for most of the industrial gains.

Silver is a staple in the jewelry market, and it is forecasted that demand for it will maintain modest growth this year. India is a leading driver of this growth as a result of silverware and jewelry sales. Online jewelry sales in the US also allow for the continuing health of silver on this front.

It is predicted that silver may soon outperform other industrial metals, including gold, because of its versatility.

Silver and Gold Prices

Gold has recent success in light of the coronavirus and the fatal US airstrike on Iranian General Qassam Soleimani. Since investors tend to favor “safe haven” assets, these events stirred investors to action. While silver has not performed as well as gold during this time, equity analysts foresee a turnaround this year from the demand of the industrial market.

It is also anticipated that silver exchange-traded product (ETP) holdings will remain elevated in 2020. This is similar to gold because of global economic uncertainties and the preference of safe-haven assets. This encourages investors to allocate into silver ETP. 

An increase in physical investment of silver bullion is estimated to occur for a third consecutive year. This is up by 7% in 2020, which reflects the progressing recovery of western markets. Expected silver price improvements and price volatility rises will both prompt new purchases of this precious metal.

Around the World

After the US, China is the second-largest consumer of silver. The uncertainty surrounding the coronavirus negatively impacts silver’s price. However, Matthew Miller, an equity analyst at CFRA Research, says CFRA forecasts continued interest in safe-haven assets this year. Additionally, silver’s price might outperform gold despite the decline resulting from the coronavirus. 

A marked shift toward looser monetary policies boosted silver investment. This occurred amid rising concerns over the outlook of the global economy from the trade war between China and the US last year. Michael DiRienzo, executive director of The Silver Institute, anticipates the international silver market will probably “experience higher silver prices in 2020…” as it comes off its 4% increase in 2019. Silver price chart

What does it mean for investors?

Uncertainty surrounding both the economy and political events will increase the market for precious metals. Silver remains a staple for net-buyers, which will cause the silver price to also increase this year. Additionally, current trends show growth in physical silver investments. They also predict a rise in using silver as an industrial metal in 2020.

The Silver Institute projects silver’s average annual price at $18.40. This is a 13% rise from 2019, and a six-year high when based on LMBA prices. Michael DiRenzo of the Silver Institute continues to explain that global economic health and geopolitical uncertainties provide the basis for predictions. These predictions contribute to why The Silver Institute foresees a return to silver industrial demand growth. Uncertainties over the economy go hand-in-hand with a striking increase of 7% in the physical investment of silver.

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