Make Kitco Your Homepage

Commerzbank: Physical silver supply shortage

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - Commerzbank commodities analyst Daniel Briesemann has picked up a narrative that some had been wondering about since the whole meme stock fiasco. The Reddit trading group did start to look at silver ETF's thinking that the silver market was dangerous under-supplied. Briesemann noted that the Silver Institute noted there is a supply deficit and he explains more in his latest report.

Breisemann noted "The Silver Institute published an interim report of the situation on the global silver market yesterday afternoon. Apparently, the physical market is set to show a supply deficit (of 7 million ounces) again this year for the first time since 2015. Overall demand for silver is expected to grow by 15% to 1.29 billion ounces, its highest level in six years, with all demand components contributing."

When speaking about real demand for the commodity he said "Industrial demand for silver even looks set to increase by 8% to a record high of 524 million ounces. This is being driven by the photovoltaic industry and electrical/electronic applications, which highlights the role silver plays in the “green” economy. Jewellery demand is also likely to be noticeably higher this year (+18%). It is investment demand that the Silver Institute expects to show the biggest growth in demand, however: it is set to soar by 32% to a six-year high of 263 million ounces. This is attributed to solid demand for coins and bars in countries like the US and India."

Lastly, on the fund situation, "Silver ETFs are expected to register inflows of 150 million ounces this year, which is less than half of last year’s figure. However, the Silver Institute’s expectation for the year as a whole implies that inflows in the remaining weeks of the year will need to pick up considerably. Though silver supply is set to be expanded by 5%, this will not quite be enough to satisfy demand."

There was some technical talk and in terms of price, he said "Silver has likewise regained some of the ground it had lost and is priced at $25 per troy ounce again. Silver has repeatedly rebounded from the technically important 200-day moving average in recent days. If it manages to exceed this threshold, silver could head towards $26 – our prediction for the end of the year – on the back of technical follow-up buying."



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.