According to the World Silver Survey 2023, the global appetite for silver surged by 18% last year, reaching a record-breaking 1.24 billion ounces and resulting in a significant supply deficit.
In 2021, the silver market faced a shortfall of 51.1 million ounces. However, the situation deteriorated dramatically in 2022, with a staggering undersupply of 237.7 million ounces. The Silver Institute has labeled this as “possibly the most significant deficit on record,” and forecasts indicate that the shortages are likely to continue in the years ahead.
The reasons for this tightening supply are multifaceted:
- Rising Operational Costs: The mining sector is wrestling with escalating expenses, particularly in energy and labor.
- Environmental Regulations: An influx of stringent environmental laws is adding layers of complexity to the mining process.
- Mexico’s Policy Shift: In a significant setback, Mexico, the world’s leading silver producer, has instituted a ban on open-pit silver mining.
With global sustainable investments reaching an astonishing $35.3 trillion, as reported by the Global Sustainable Investment Alliance, the demand for silver — integral in many green technologies — is poised to skyrocket.
For many investors, alarm bells are ringing. When record high demand meets a tightening supply, at some point, something has to give. Either the supply of silver somehow increases a great deal, or the price of silver will increase.
Given these market conditions, the logical outcome could be a surge in silver prices in the years ahead.
Many analysts like Tavi Costa, renowned portfolio manager at Crescat Capital, agree that silver prices are going higher. He says, “Going back to 2011, you can see the monthly chart, the resistance has lessened for over a decade now. And we’re very, very close to a breakout with this chart. This could happen any month really.”
Courtesy of GoldSilver
