Despite Supply Issues, Silver Has Great Opportunities in 2022
The Silver Institute has released its 2022 World Silver Survey, showing that the metal is expected to hit a record high in 2022 due to its growing uses in sustainability-minded projects. However, experts warned that the growing demand will lead to a greater supply deficit. Despite being one of the countries with the greatest potential, Mexico may not benefit much due to restrictive government policies.
According to the Silver Institute, demand for silver is forecast to rise up to 1.1 billion oz in 2022, representing a 5 percent increase compared to 2021’s demand. Consulting firm Metal Focus said that while it will be the largest increase in demand recorded since 2010, it will also generate a supply shortfall of 71.5Moz. The deficit comes after a shortfall of 51.8Moz in 2021. “We believe that this is the start of a structural change in the market where we see deficits that will carry on for some time,” said Philip Newman, Director, Metal Focus.
However, the Silver Institute said supply prospects are expected to improve in 2022 with an increase of 2.5 percent. The biggest production increase will come from Mexico, which is starting new projects and increasing output at long-established mines, followed by Chile and Russia.
Felipe Martinez, Director of Business Development, Robit, told MBN that as industrial demand for silver continues to increase in the coming years, the future for Mexico, which is the world's leading silver producer, looks bright. “Mexico is in a terrific position to leverage these macroeconomic trends, and historic uses for silver naturally provide a good benchmark for the future as its investors seek a safe haven,” said Martinez. However, he stressed that the negative supply and demand issue will remain. Consequently, miners will have to produce and recycle more to meet the new demand. However, due to new government policies, experts say these efforts could be strained.
Bradford Cooke, Founder and CEO, Endeavor Silver, told MBN that current government policies directly oppose private investment, not only in lithium but in any metal, which affects those who are at the forefront of the green energy revolution. “We see this position against investment in the energy bill and the suspension of the granting of new mining concessions and mining permits. Mexico has chosen not to participate in this global transformation to decarbonize the economy,” said Cooke.
Despite these challenges, the Silver Institute stressed silver countries like Mexico will continue to benefit from rising prices and market demand for silver. By 2022, the price of silver is forecast to average US$23.90, down only 5 percent compared to 2021. Meanwhile, 2022’s industrial demand will set a new record, as the promotion of green initiatives and geopolitical conflicts are making silver an attractive a safe haven for investment.