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Silver investment increased by 10% during the first half of 2020 reiterated its role as a valued metal. There was also remarkably strong growth in silver-backed exchange-traded products (ETPs) and solid silver coin and bar investment.

The silver price that had fallen sharply in mid-March recovered strongly with the price averaging US$16.65 through to the end of June. The white precious metal rose by 56% to reach US$17.84 at the end-June.

Silver Investment

Retail and institutional inflows into silver ETPs have been impressive in 2020. As of June 30, global holdings touched an all-time high of 925 million ounces (Moz). The ETP growth in the first half of 2020 of 196 Moz surpassed the highest annual inflow of 149 Moz set in 2009. Retail bullion coin sales surged by an estimated 60% year-on-year.

Silver bar and coin sales rose in response to a weakening economic outlook attributed to the global pandemic, which led to some supply-chain disruptions. The disruptions saw dealer stocks for silver investment products quickly depleted, resulting in extended delivery lead times and higher premiums.

Industrial and Jewelry Demand

The COVID-19 negatively impacted silver fabrication demand in the opening half of 2020. Silver industrial demand has shown signs of improvement from May onwards after some key economies gradually lifted lockdown measures. However, weak consumer confidence and a sharp rise in unemployment weighed on demand in many end-user applications such as automobiles and consumer electronics.

Silver jewellery demand is attributed to the relative affordability and more suitability to the online selling of silver jewellery. Michael Barlerin, Director of the Silver Promotion Service (SPS), highlighted the results of a consumer research survey. The survey showed 64% of consumers reiterating that they were planning to purchase belated jewellery gifts, and over 50% indicated it would be silver jewellery.

Silver Mine Supply

Global silver mine supply is expected to continue its decline, with the temporary production stoppages of mining operations in many silver mining countries. Going forward, global silver mine production is forecast to dip by 7% in 2020.

Silver Price in Second Half of 2020

Investment inflows into the white precious metal are likely to grow in the second half of 2020. The precious metal price is anticipated to cross the US$21.00 mark in late-2020, with a fall in the gold:silver ratio to below 90.