Recent gains in the stock market have been a bit of a downer for the silver market.
After climbing above the $16.25 cent an ounce level in February, silver slid just below the $15.00 an ounce level. Blame it on the stock market.
For now, investors have adopted a “risk-on” attitude and have pulled back on safe-haven purchases like silver.
Despite the modest pullback in silver in March, there remain three trends that suggest silver will claw its way higher again before 2019 is over.
The Silver Institute recently released its 2019 World Silver Survey report, which has been published since 1990.
The new report identified 3 significant positive developments that emerged in the silver market last year.
While silver may be down, it’s not out for the count.
These positive developments reveal longer-term shifts that bode bullishly for silver this year and beyond. Here’s what the report said.
- Silver Demand Rose in 2018 – The First Time Since 2015
Total silver demand rose 4% to 1.03 billion ounces, according to the new Silver Institute report.
- Retail Investors Bought Silver Bars (A Lot)
The report documents a “robust recovery in retail investment, led principally by silver bar demand, which climbed sharply last year.”
- Global Silver Mine Supply Fell for Third Year In A Row
Silver mine supply dropped in 2018 continuing a recent falling trend. From 2003 to 2015 global silver supply posted steady annual increases. That trend changed three years ago.
Also, “silver scrap supply has been in retreat since 2012 and fell by nearly 2 percent last year,” the report noted.
Key finding: The rising demand and falling supply created a physical deficit of 29.2 million ounces (Moz) in 2018.
Supply and demand trends are longer-term influences on the market, which suggests the modest pullback in the first quarter of 2019 is a minor blip for silver.
Individual Investors Added to Their Portfolio
Breaking down the Silver Institute’s data, the silver coin and bar category soared by an impressive 20 percent. Digging deeper that big jump last year was entirely driven by silver bar demand, which jumped up by 53 percent.
Silver is an excellent portfolio diversifier, along with gold. Just as diversification is recommended inside the equity market, diversification within the precious metals arena offers long-term investors the ability to maximize portfolio returns while minimizing volatility. See silver bar types here, with larger investments simplified through bulk silver purchases called monster boxes.
Jewelry, Silverware Demand Also Climbed
Silver jewelry demand also climbed last hitting a total of 212.5 million ounces in 2018, the report stated.
India was the standout buyer, pushing its demand for jewelry up 16 percent to achieve a new record level.
However, American silver jewelry buyers also took the market by storm, with a 7 percent increase in 2018 to score an all-time high at 17.5 million ounces.
Around the world, total global demand for silverware rose by 6 percent last year to 61.1 million ounces.
The Bottom Line
The long-term rising demand and falling supply trends point to significantly higher silver prices in the years ahead. How high could silver climb? Using history as a guide, the silver market climbed above the $49.00 an ounce level back in 2011. Looking ahead, that means the silver market could double or triple in value based on historical pricing.
Your investment dollars buy more silver in the current market environment. If you’ve been considering adding to your precious metals portfolio, silver offers excellent value at current levels. Call a Blanchard portfolio at 1-800-880-4653 to learn about investments that may be beneficial for you.