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Silver price to see fireworks in first half of 2022, challenges in second half - Silver Institute

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(Kitco News) - Silver investors should expect to see a more nuanced market in 2022 as industrial demand is expected to remain strong while investor demand remains relatively flat, according to the Silver Institute's annual World Silver Survey.

The research for this year's report was completed by Metals Focus. In a telephone interview with Kitco News, Phillip Newman, a founding partner at the British precious metals research firm, said that challenging forces will dominate the silver market throughout the year.

Investors continue to navigate fragile and volatile financial markets, created by Russia's invasion of Ukraine and, at the same time, protect themselves from the growing inflation threat, Newman said. Meanwhile, looking at silver's industrial side, the precious metal faces consistent demand as the global green energy transition moves forward. However, the growing threat of stagflation and a potential recession could push demand further out.

Putting everything together, Metals Focus expects to see solid silver prices in the first half, with prices rising to a peak of $28 an ounce. Newman said he expects prices to average $23.90 an ounce for the year, down 5% from the 2021 average price.

"We expect silver's fireworks will be concentrated in the first half of the year. In the later part of the year, there's potential for lower inflation readings and more consistent rate hikes from the Fed. Some investors will take this as an opportunity to liquidate some of their silver. This two-way institutional activity we think will weigh on prices, but not drastically."

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While investment demand for silver faces some challenges, Newman said that the precious metal's industrial demand will remain solid through 2022. Metals Focus sees a 5% rise in global silver demand due to further structural advancements in industrial fabrication, which is expected to achieve another record high in 2022.

In 2021, silver demand pushed back above 1 billion ounces. Newman said this could be a new trend for the silver market as nations look to produce more green energy through solar power. Newman added that slower growth could impact some industrial demand; however, he said that the green transition is a trend that is not going away.

Finally, along with solid demand, Newman said that the silver market is on the cusp of a new trend where it could see years of supply deficits.

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.