Silver hit another fresh high on April 8, all thanks to a complex interplay of factors spanning economic data points, geopolitical tensions, and market-specific dynamics. In 2023, prices of silver advanced 7.19%, while the yellow metal gold gained 13% during the year. On a year-to-date basis, silver has gained more than 11% till April 8. On the other hand, gold has rallied nearly 15%.
Sharing its view on white metal, brokerage Motilal Oswal Financial Services said that they continue to be strongly positive in silver over the next few months. “We advise to be invested in silver and keep adding on dips towards Rs 75,000 for a medium to long term upside towards Rs 92,000 followed by Rs 1 lakh,” the brokerage said in a report. Silver traded at Rs 81,313 per kg on April 8, while gold was at Rs 70,850 per 10 gram.
According to Motilal Oswal Financial Services, geopolitical tensions have continuously built in risk premium in the market since 2020, some or the other black swan has hit markets and supported the precious metal pack. In 2022, the Russia–Ukraine war, last year the conflict between Israel and Hamas group, expectations for a tussle between Russia and Ukraine is building up supporting the safe haven assets. Geopolitical risks, including conflicts, geopolitical tensions, and geopolitical uncertainty, heightened market volatility and drove demand for silver as a perceived safe investment.
On the demand side, silver benefited from robust industrial demand, particularly in sectors such as electronics, solar energy and healthcare. The global economic recovery, coupled with increased investment in renewable energy infrastructure, drove demand for silver in various industrial applications. Furthermore, the resurgence of manufacturing activity in major economies contributed to higher silver consumption in sectors like automotive and consumer electronics.
Meanwhile, the Silver Institute estimates 2023 demand from silver used in photovoltaics (PV) at around 161 million ounces, up from 140 million ounces in 2022, and representing about 13% of total global silver demand. This demand is expected to continue to increase to reflect the growth of solar installations as one of the main sources of renewable energy globally. By 2028, the International Energy Agency estimates that solar photovoltaics (PV) will account for about 13% of total global electricity capacity, up from approximately 5% of capacity.
“The implications for silver are that increasing solar PV demand over the next five years and beyond is unlikely to be matched by an increase in supply. A more than doubling of solar PV capacity by 2028 should translate to more than twice the PV demand for silver. The annual global supply of silver has been relatively unchanged over the past 10 years, as primary silver deposits are hard to find. In the automotive industry, greater use of electronic components and investment in battery charging infrastructure will continue supporting silver offtake,” Motilal Oswal Financial Services said in a report.
According to DSP Mutual Fund, silver has been lagging due to a mute industrial demand from China, but they are seeing signs of the Chinese economy picking up and is expected to improve.
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