Silver prices have recently soared in domestic and international markets, fueled by strong festive season demand and notable global factors.
Domestically, silver breached the ₹1 lakh per kilogram mark, while internationally, prices reached a 12-year high of over $34 per troy ounce. Analysts expect this upward trend to persist as silver prices often correlate with gold, which has also been on an upward trajectory. Forecasts suggest that silver could reach its all-time high of $50, last seen in April 2011, with an end-of-year target of around $40 per ounce. Source: Mint
Silver Price Historical Trend in India
Silver Outpaces Gold in 2024
Silver’s performance this year has outpaced gold, reducing the traditional gold-to-silver price ratio. Silver has surged around 42% year-to-date, compared to gold’s 32% rise. In comparison, stock market returns have been relatively modest, especially with recent market corrections.
With silver gaining approximately $10 per ounce since January, its appeal as an investment has risen, particularly given the safe-haven status that silver shares with gold. Source: Mint
Change in Gold and Silver Rates in the Last 10 Years
Year | Gold-Rs/10 Gram | Silver Rates in Rs/Kg |
29-10-24 | 80450 | 99000 |
31-03-23 | 51484 | 66990 |
31-03-22 | 65330 | 76000 |
31-03-21 | 48720 | 65400 |
31-03-20 | 48651 | 40500 |
31-03-19 | 35220 | 40600 |
31-03-18 | 31438 | 41400 |
31-03-17 | 29667 | 37825 |
31-03-16 | 28340 | 36990 |
31-03-15 | 26245 | 37825 |
4 Key Factors Fueling Silver’s Price Rise
Several global factors are driving Silver’s recent rally. Here are some of the primary influences on silver prices:
U.S. Federal Reserve’s Interest Rate Cuts
Interest rates set by the U.S. Federal Reserve directly affect bullion prices because of their inverse relationship. When rates are lower, metals like gold and silver become more attractive as they help protect against inflation and economic uncertainty.
The Federal Open Market Committee (FOMC) recently lowered interest rates by 50 basis points in September—the first cut in four years—and hinted at possible further reductions through 2025. Lower rates generally lead to more investment in precious metals, increasing the demand for silver as an alternative asset.
China’s Economic Stimulus
China’s economic policies also profoundly influence global commodity markets, including silver. China recently announced a series of stimulus measures to spur growth as the world’s second-largest economy.
Analysts expect additional stimulus actions, given that current measures may not be sufficient to reach the projected 4.8% growth rate this year. Since China is a primary silver importer, any economic turnaround will likely boost silver demand, especially for industrial purposes. This trend mirrors the rise in silver prices in 2011, supported by China’s growth.
Supply Shortfalls: A Key Market Driver
Despite abundant global reserves, silver supply has not kept up with demand over the last three years. According to the Silver Institute’s 2024 World Silver Survey, the global market recorded a supply deficit of 184.3 million ounces in 2023, expected to widen to 215 million ounces this year. The primary reasons for this shortfall include:
- Industrial Demand: There is a high demand for industrial silver applications.
- Reduced Mine Output: Labor strikes, lower ore grades, and mine closures in major silver-producing countries like Mexico, Argentina, Australia, and Russia have impacted production.
With supply failing to meet demand, the pressure on silver prices remains high, especially as industrial and investment demands surge.
Rising Industrial Demand: Driving Silver’s Value
Silver’s applications in industry are a significant factor in the rising metal price. Here are some key areas where silver demand has been growing:
- Photovoltaic Sector: Silver is crucial for solar energy technology, especially photovoltaic cells. In 2024, demand from the photovoltaic sector alone is projected at 232 million ounces, representing a significant portion of industrial demand and outpacing demand for silver jewelry.
- Electronics and Electrical Manufacturing: Silver is widely used in electronic devices due to its excellent conductivity. Nearly every electronic device, from mobile phones to computers, contains silver. For 2024, annual demand in this sector is estimated at 485.6 million ounces. Additionally, silver is used in specific military applications, including missile manufacturing, which adds to the market amid ongoing global conflicts.
Industrial demand for silver rose by 11% in 2023 and is projected to increase by another 9% in 2024, reflecting a consistent trend despite economic hurdles. Although there are substantial global silver reserves, a supply shortfall has continued due to decreased mine production and heightened industrial demand. Source: Mint
India’s Role in Silver Demand
Though a relatively small producer of silver, India is one of its largest consumers, importing substantial quantities of the metal for various uses. India’s demand is primarily driven by:
- Jewelry and Silverware Fabrication: In 2023, India’s demand for silver in jewelry fabrication was about 83.7 million ounces, nearly 41% of global demand in this sector. While this is a decline from 2022 levels due to a depreciating rupee and higher import duties, the country’s demand remains considerable.
- Physical Investment: India’s physical investment demand for silver, while smaller than that of the U.S., is substantial. In 2023, it was recorded at 49.3 million ounces, about 20% of the global total, despite falling from the previous year’s levels.
India’s silver demand influences the global supply shortage and can impact price levels, particularly if demand trends shift upward. Source: Mint
Conclusion
In summary, silver’s price outlook remains bullish. It has the potential to hit new highs, supported by robust industrial demand, safe-haven appeal, and constrained supply. With key global economic and geopolitical factors playing out, silver’s performance in 2024 is set to continue catching investors’ attention.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
FAQs
Why is the price of silver increasing globally?
The global surge in silver prices can be attributed to several key factors. First, increasing industrial demand has increased consumption, particularly from the electronics and solar energy sectors.
Second, growing investor interest in silver as a hedge against inflation and economic uncertainty has fueled demand. Silver’s role in renewable energy technologies, such as solar panels and electric vehicles, has also contributed to its rising value. Lastly, geopolitical tensions and supply chain disruptions have added to the price volatility and upward pressure on silver prices.How does silver’s role in renewable energy impact its price?
Silver is a critical component in various renewable energy technologies. It’s used in solar panels for its excellent electrical conductivity and light-sensitive properties. As the world transitions towards sustainable energy sources, the demand for silver in solar panels and other renewable energy applications is increasing. This growing demand and potential supply constraints have contributed to the rise in silver prices.
Is investing in silver a good idea right now?
Investing in silver can be a strategic move, but it’s essential to consider your risk tolerance and long-term investment goals. While silver has historically been a good hedge against inflation, it’s also a volatile asset. If you’re considering investing in silver, it’s advisable to diversify your portfolio and consult with a financial advisor to make informed decisions.
What are the potential risks associated with investing in silver?
Like any investment, investing in silver carries certain risks. Price volatility is a significant factor, as silver prices fluctuate significantly due to market sentiment, economic conditions, and geopolitical events. Additionally, the physical storage of silver can be challenging and costly. It’s crucial to conduct thorough research and understand the potential risks before making any investment decisions.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.