Silver to have bonanza 2022 after record demand last year
Last year was the first-time global silver demand had reached 1Boz since 2015.
The Washington-based Silver Institute is forecasting demand for silver this year to set a record of 1.112 billion ounces, which is after turning in an estimated 1.029Boz in 2021 — itself a new record.
And that boost in offtake this year is expected to be spread across most key demand components: industrial, bullion, jewellery and silverware.
Last year was also the first time since 2015 that global demand hit 1Boz.
Of course, as history amply demonstrates, demand levels are no guarantee that prices for the metal will take off.
As we saw in 2021, the long-promised silver price rally ran out of steam during the year, and as of today the metal is down 14.15% year on year, while the gold-silver ratio remains high at 1:79.
Silver price ‘challenging’ for second half
Indeed, the Silver Institute warns that the price outlook in the second half of 2022 “becomes more challenging”.
For the first half, though, the institute believes that macroeconomic and geopolitical conditions will generally support precious metal prices.
The outlook for 2022 assumes a 5% increase in silver demand for industrial fabrication, as the metal’s use expands in both traditional and critical green industries.
“Ongoing improvements in the global economy will give silver industrial applications an additional boost, mitigating near-term headwinds from supply chain bottlenecks and the challenges in certain regions from the ongoing COVID pandemic,” Silver Institute predicts.
The outlook for silver demand in automotive and 5G-related applications is also forecast to remain robust.
“Moreover, as chip manufacturing bottlenecks are forecast to ease gradually in 2022, the rise in silver demand for these and other electrical and electronic applications is expected to expand.”
Silver bullion buying to grow, Indian demand expected to bounce back
Physical demand (silver bar and coins) is projected to jump 13% this year – achieving a seven-year high.
Elevated inflation pressures will grow in 2022, which should encourage retail investors to seek physical silver for wealth preservation.
“Accordingly, profit-taking is likely to remain subdued,” the institute says.
Silver’s use in jewellery and silverware is expected to jump by 11% and 21% respectively.
In terms of jewellery, the Omicron wave has affected silver jewellery sales in India, but an expected easing of pandemic restrictions, plus efforts by jewellery retailers to increasingly push silver to urban consumers, will favour jewellery sales across the sub-continent.
“India will account for the bulk of the increase for silverware in line with jewellery,” reports the Silver Institute.
Australian silver explorers still in top gear
Meanwhile, Australian silver explorers are maintaining their high level of activity.
In South Australia, Investigator Resources (ASX: IVR) has now completed its pre-feasibility study for the company’s flagship Paris silver project.
The study highlighted that Paris is a low-risk, high-grade, near surface open pit operation, the company said in its quarterly report.
In the December quarter, Investigator also reported “encouraging” silver and gold intersections at its Ares, Paris East and Helen East prospects.
Argentina-focused explorer E2 Metals (ASX: E2M) last week reported continuing success with its silver hunt in the South American country, with ongoing infill and step-out drilling at its Malvina prospect continuing to deliver high-grade silver intersects, including 14m at 2,541 grams per tonne along with 8.7g/t gold.
Malvina is part of the company’s the Conserrat gold and silver project located in the Santa Cruz province of Argentina.
Argent Minerals (ASX: ARD), while currently focusing on its Pine Ridge gold target, noted in its recent quarterly report that its Kempfield polymetallic project in NSW is now entering a new stage of resource upgrade work, with extensional drilling testing targets outside the project area.
“The support for a development strategy at Kempfield could be realised with increasing silver, zinc, lead and baryte commodity pricing — and declining stockpiles,” the company noted.
NSW silver project begins production next month
Meanwhile, Manuka Resources (ASX: MKR) will begin producing silver in March at the revived Wonawinta project near Cobar, NSW.
It has also reported undertaking “intensified” drilling there for Cobar-style lead-zinc-silver and copper-gold.
Another NSW silver hunter, Thomson Resources (ASX: TMZ), has now completed the acquisition of the Silver Spur mine which historically produced 2.19Moz of silver.
Thomson is also undertaking work at the historic Conrad mine in NSW for silver, tin, lead and copper.
And Silver Mines (ASX: SVL) is now in the final approvals stage for its Bowdens open cut silver mine in NSW, where a 30,000m drilling program is in progress.