Silver set to outshine gold as green technologies drive demand
Silver is set to outperform gold due to its sensitivity to manufacturing activity as global industrial production picks up, analysts believe. Bank of America analysts see silver reaching $35 per ounce by 2026, up from its current spot price of $28.40. In the year-to-date, silver has added almost 20%, in line with gold’s gains.
“Positioning on silver has been more bullish due to its link to green technologies,” the bank’s analysts wrote in a research note. “We see upside for both precious metals in the next 18 months but believe silver should outperform gold because it is more sensitive to manufacturing activity.”
As a metal important for future technologies, silver is seeing increased demand from rising electric vehicle penetration rates and solar installations. The China Photovoltaic Industry Association has reported the growing adoption of new technologies by Chinese solar manufacturers, which analysts highlighted has implications for silver usage.
“While thrifting could slow down demand, we still expect rising silver offtake on an acceleration of solar deployment globally,” analysts wrote. Notably, China has periodically swung to being a net importer of silver in recent months to support its fabrication needs due to changes on both the demand and supply sides.
“China’s silver consumption has strengthened on rising usage from the solar industry, while domestic silver production has slowed because the country’s smelters face tight global mine supply,” they wrote. “The import backdrop has also improved in other countries, with both the US and Japan boosting silver purchases from abroad.”
Silver is in its fourth year of a market deficit, driven by a supply shortfall and increasing industrial demand, particularly in the solar energy sector. U.S. Global Investors (NASDAQ:GROW) CEO Frank Holmes believes this market deficit spells an opportunity for inventors.
He highlighted that the deficit is expected to widen by 17% reaching 215.3 million ounces, which should boost prices. ”The ‘poor man’s gold’ is proving its worth, driven by a global supply deficit and increasing demand. Back in January, the Silver Institute forecasted that global silver demand will reach a near-record 1.2 billion ounces in 2024, up 1% from last year,” Holmes said.
Global silver mine production is expected to grow 4.1% to 916.1 million ounces in 2024 fuelled by the resumption and ramp-up of operations temporarily halted last year, according to an analysis by GlobalData.
But this is still short of the 1.2 billion ounces of demand forecast, suggesting this persistent supply-demand imbalance will continue to drive silver prices higher.
Source: https://www.proactiveinvestors.com/