By Sean Kelly
Exceptionally Encouraging Outlook for Silver!
Led by rising industrial and investor demand, the average silver price in 2021 is expected to increase 46 percent over the 2020 average price.
That is the result of the new annual analysis of supplies and demand by the Silver Institute, an international trade association of both producers and users.
Demand is forecasted to rise 11 percent in 2021, reaching 1.025 billion ounces.
While many commodities struggled with the pandemic lockdowns in 2020, silver was the top performer of every major investment class. It appreciated 48 percent over the 12 months, outperforming US stocks by three times.
The average annual silver price (based on London benchmark daily prices) rose from $16.19 in 2019 to $20.52 last year, a 27 percent increase. An expected average annual price this year of $30 an ounce represents a 46 percent gain over last year.
The Silver Institute projects physical silver for investment, bars and coins, to rise to 257 million ounces, a six-year high.
Total industrial demand in 2021 is expected to surge nine percent over the prior year, setting a four-year high of 510 million ounces. The analysis finds that most of the industrial gain will come from the electrical and electronics segment, specifically citing the penetration of 5G technology.
After staging a recovery in the second half of 2020, the photo-voltaic sector should account for 105 million ounces of silver demand this year.
Global jewelry demand and demand for silverware, will remain below pre-COVID levels.
According to the report, “Mine production output should recover and rise from the pandemic-affected 2020 level, achieving a double-digit gain this year to 866 million ounces, which would be the highest total since 2016.”
While the Institute’s forecasts are based on known supply and demand fundamentals and trends, it is silver’s role as a monetary commodity that has been responsible for it’s powerful bull markets and biggest gains over the last several generations.
It is for that reason that we call your attention to forecasts from respected refinery and banking analysts with a focus on the deterioration of unbacked fiat currencies. We have previously cited the MKS PAMP Group based in Geneva which calls for “silver averaging $32.50 an ounce and to peak at $40.00 an ounce in 2021.” Degussa, a major German bank headquartered in Frankfurt, examines deficit-financed government spending and central bank money printing sprees, and forecasts that in 2021, “the silver price could go up to $47 an ounce.”
As we wrote recently (The Two Powerful Dynamics Driving Silver Higher!), “silver has a unique role that those other industrial commodities do not have. It is not merely an industrial commodity that offsets a decline in the currency’s purchasing power. A depreciating currency awakens silver’s other virtue. ‘
Like gold itself, silver is a monetary commodity. Silver is prized as a store of value in the face of currency destruction.
Gold’s monetary nature is never really forgotten (despite what money-printing central bankers might wish). But during periods of economic stability, silver’s monetary role can be eclipsed by its industrial role.
Yet in an environment of monetary instability, unpayable debt and wanton money printing, silver eventually awakens from its slumber.
And then it roars!
We conclude that between the fundamentals of existing supply and demand analysis, and the unfolding of the debt-driven dollar woes, the future of silver prices is brighter than ever. Furthermore, if the substantial dollar crash that is projected for this year materializes (see What to Own When the Dollar Collapses?), all of these forecasts will prove inadequate and the price of silver will reach heights that are unforeseeable.