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Pandemic worries boosted silver investing in 2020

Kitco News

Silver demand dropped in nearly every category in 2020 except for investment, according to a report by the Silver Institute published today.

Net physical investment rose from 185.7 million ounces in 2019 to 200.5 Moz in 2020.

"Considerable growth in silver investment was the chief driver of the metal’s 27 percent average price gain in 2020. Leading the way was substantial demand for silver-backed exchange-traded products (ETPs), which took global holdings above one billion ounces for the first time since their introduction in 2006. Strong demand for silver bars and coins pushed physical investment demand up 8 percent to a four-year high," writes the authors of the study.

Silver demand was still down for the year "...due overwhelmingly to the pandemic and its direct impact on economic activity and, in turn, many silver end-uses." The institute noted that overall global silver demand was off 10 percent in 2020 to 896.1 Moz.

Industrial demand was at a five-year low at 486.8 Moz. However, there was a slight uptick in one category: photovoltaic demand increased 2 percent to 101 Moz last year.

Supply dropped steeply, too, due to the pandemic and restrictions that were placed on travel.

"In 2020, global mine production registered its fourth consecutive annual decline, its most significant drop of the last decade, falling by 5.9 percent to 784.4 Moz. Output from primary silver mines fell by 11.9 percent to 209.4 Moz, caused by temporary mine closures in several major silver producing countries in the first half of 2020 due to the pandemic," writes the reports authors.

Looking ahead, the institute believe silver investment will stay strong.

"Demand for silver bars and coins is expected to post its highest annual figure since 2015. ETP inflows are unlikely to match last year’s levels but should remain historically high," writes the institute.

Industrial demand is also expected to rise.

World Silver Demand In 2020

2019 2020Industrial 515Industrial 515Photography 33Photography 33Jewelry 200Jewelry 200Silverware 62Silverware 62Net Physical Investment 186Net Physical Investment 186469 Industrial469 Industrial28 Photography28 Photography149 Jewelry149 Jewelry33 Silverware33 Silverware201 Net Physical Investment201 Net Physical Investment

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