Reflections: The Silver Market in 2024

As we wrap up 2024, it’s essential to reflect on silver’s performance this year. The Silver Institute serves as the global voice for silver, and we recently shared our thoughts on the market with our consultants at Metals Focus. The team at Metals Focus produces our “World Silver Survey,” which many market participants consider the most authoritative publication on silver. The Survey was released in April, and in November, at the Silver Institute’s Annual Silver Dinner, Metals Focus provided an update on the market.

The global silver market is set to record a physical deficit in 2024 for the fourth consecutive year. Record industrial demand and a recovery in jewelry and silverware will lift demand to 1.21 billion ounces in 2024, while mine supply will rise by just 1%. Exchange-traded products are on track for their first annual inflows in three years as expectations of Fed rate cuts, periods of dollar weakness, and falling yields have raised silver’s investment appeal. 

Some highlights from the presentation by Metals Focus include:

• The silver price has posted a remarkable rally during 2024-to-date, nearly touching $35 for the first time since 2012. Through November, prices have surged by 29% since the beginning of this year. Leaving aside a brief drop to a three-year low of 73, the gold:silver ratio has largely held between 80 and 90 so far in 2024.  

• Global silver demand is expected to rise by 1% year-over-year (y/y) to 1.21 billion ounces in 2024, making it the second highest in Metals Focus’ series (which starts in 2010). Most silver demand segments are expected to strengthen this year, led by industrial applications. This leaves physical investment as the only key demand component to post a meaningful decline.
   

• Industrial demand is forecast to rise by 7% in 2024 to surpass 700Moz for the first time on record. In keeping with the last two years, the growth in 2024 has been underpinned by gains from green economy applications, particularly in the photovoltaic (PV) sector. Higher demand is also expected from the automotive sector, as silver benefits from greater vehicle sophistication, the rising electrification of powertrains and ongoing investments in infrastructure, such as charging stations. While a challenging macro backdrop has weighed on sales of consumer electronics, the rapid adoption of AI technologies has resulted in a growing need for technological upgrades, replacements and new infrastructure investment, all of which have assisted silver demand.

• Silver jewelry and silverware are both projected to rise by 5% in 2024. India has been the key growth contributor for each segment, with robust sales between late July and early September when the import duty cut coincided with a pullback in the dollar silver price. Jewelry consumption is also set to grow in the United States, which also benefits key Asian and European exporters. 

• Physical investment is forecast to fall by 15% to a four-year low of 208Moz in 2024. Losses have been concentrated in the United States, where coin and bar sales are on track for a 40% decline to its lowest level since 2019. This reflects an absence of new crises from 2024 to date, which has affected precious metal retail investment across the board. Physical investment in Europe has also weakened, but this year’s decline has been relatively modest, following a pronounced fall in 2023. By contrast, India is expected to enjoy higher bar and coin sales thanks to bullish price expectations and a cut to the import duty on silver bullion.

• Exchange-traded products are on track for their first annual inflows in three years. Expectations of Fed rate cuts, periods of dollar weakness and falling yields have raised silver’s investment appeal. Investor interest has also benefited from silver’s breakout of rangebound trading. Global holdings were at their highest since July 2022 at the end of October, up by 78Moz, or 8%, from year-end-2023. 

• In 2024, global mined silver production is estimated to rise by 1% y/y to 837Moz. Growth from Mexico, Chile and the United States will outpace lower output from Peru, Argentina and China. Production from Mexico is forecast to increase by 10Moz, equivalent to 5% y/y, to 209Moz. This will be driven by higher mill throughput and grade at Pan American Silver’s La Colorada operation, following upgraded ventilation infrastructure. Output will also be boosted by a recovery in production from Newmont’s Peñasquito mine. The average All-in Sustaining Cost (AISC) for primary silver mines decreased in 1H24. A slowdown in the rise of input costs was compounded by higher by-product revenue, helping even high-cost producers in the 90th percentile to record positive margins. Continuing high metal prices will generally offset production costs and larger royalty payments, lowering AISC.

• Recycling in 2024 is expected to grow 5% to a 12-year high. Much of this increase comes from price sensitive sectors, such as a spike in western silverware scrap. Industrial recycling also edges higher, but growth here is largely related to structural factors.

• With slight growth in demand and supply, the global silver market is set to record a physical deficit in 2024 for the fourth consecutive year. At 182Moz, this year’s deficit has changed little from 2023, and it is still elevated by historical standards. More importantly, Metals Focus forecasts this deficit will persist for the foreseeable future.

It’s important to note that these numbers are preliminary and will be updated in April when we release our “World Silver Survey 2025.” Below is a chart from our press release on Nov. 12 at the dinner.