Silver has always been known as a very versatile precious metal and the more it gets used in industrial applications the more demand there is for the white metal. The demand is driven by more than just industrial users but silver has been used in medical applications, in tableware and in the jewellery industry. However, the supply of silver isn’t infinite which is why recycling companies have been growing. Still the largest consumers of silver are in the technological sector which accounts for more than half of the global demand. The reasons for this are due to the properties that silver has which include strength, malleability and ductility.
In 2020, the global demand for silver decreased from 995.4 million ounces to 896.1 million. The biggest drop came from the consumption of silver in the silverware and silver jewellery markets. Last year, things took a turn and instead of the usual people demanding silver, the biggest demand for silver came from investment grade silver bars and silver coins.
Moving forward, experts believe that the demand will continue to grow because of the growing solar energy sector and dealers are looking for people who want to sell silver bullion.
There is more to be said about the factors affecting the demand for silver and its rising prices.
- Industrial use
In 2020, the demand for silver rose to 486.8 million ounces. Silver is used in electrical applications because it has excellent electrical and thermal conduction. Besides electrical application, silver is used in the automotive sector where silver-coated contacts activate basic functions like starting the car’s engine, and in the operation of power based functions like opening and closing electrical windows, adjusting electrical car seats and other activities.
The demand for silver in the jewellery industry was 148.6 million ounce. Demand in 2020: 148.6 million ounces. When it comes to the jewellery industry, silver is easy to work with. It is lustrous and very resilient and can easily be molded or sculpted into any shape. The majority of silver that is mined gets turned into jewellery, however the mining sector has been under a lot of strain recently and the demand for silver fell from 201.3 million ounces to 148.6 million ounces between 2019 and 2020.
- Investment grade silver Bullion
In 2020 the demand for silver used to make silver bullion bars and bullion coins was 200.5 million ounces. This is expected to fall even more because government have been phasing out the production of silver coinage as currency. Bullion coins are however, special. They are produced specifically for investment purposes and are of the highest purity of silver. The consumption of silver bullion in bar and coin form increased from 187.7 million to 200.5 million ounces in 2020 because more investors were buying this precious metal as a store of wealth.
Silverware accounts for 32.6 million ounces supplied between 2019 and 2020. Silverware which is mainly made of sterling silver has been the standard for silver flatware including cutlery and other household products. The metal does not tarnish which makes is why it becomes family heirlooms that can be passed down from generation to the next generation. To make it strong to be used as cutlery, silver is often mixed with other metals like copper.
All in all silver, took a few knocks as far as supply is concerned but consequently, when demand outstrips supply the price of silver goes up. If you are looking for a reason to sell silver bullion then consider the timing and sell when demand is high and supply is low like it is right now.