(Kitco News) – While the election of Donald Trump has been a setback for silver in the near term, and the threat of tariffs now hangs over the industrial side of demand, the gray metal still has some strong drivers to support price growth in the year to come, according to Michael DiRienzo, president and CEO of the Silver Institute.
In an interview with CNBC India, DiRienzo was asked about Trump’s likely impact on silver prices. He said the Silver Institute sees several potential factors related to the incoming administration, but also a number of unknowns.
“It's anybody's guess how this is going to affect the commodities complex,” he said. “When he was elected in 2016 it affected it to a certain degree. The dollar is important as it is the currency that is used by so many nations across the world, and if it continues to rise as it has since his election, it could have an impact on precious metals prices, including silver.”
Tariffs are another factor that could have a major impact on precious metals, and on silver in particular.
“It's not good news when you hear the word tariff,” DiRienzo said. “You look at the high number he wants to put on China, will that affect Chinese industrial demand? That's a big part of the silver equation these days, it's an investment metal and it's an industrial metal right now. We'll just have to wait and see how this affects silver.”
The Silver Institute’s latest numbers project that China’s world-leading share of silver demand will continue to rise in 2025.
“China is going to be the leader again this year with respect to industrial demand,” he said. “If you just look at their electrical and electronics component alone, that's expected to hit a new high of about 210 million ounces, which is roughly 6,600 tons. To put that in perspective, just two years ago their demand was about 3,900 tons, with respect to just that one category. We do think globally, however, that certain components are going to rise over the year.”
DiRienzo also addressed investment demand for silver, and said that the Indian is helping to support the global numbers.
“In terms of global investment demand, India is really keeping us in the game right now,” he said. “We are projecting about a 15% decrease this year in terms of physical investment, and we're talking coins and bars, but on exchange-traded products, we're looking at our first annual inflows into these products in three years, and that has come along with the expectation of further Fed rate cuts. There have been some periods of dollar weakness, and the falling yields have benefited silver investment at the end of October.”
“This year, we're looking at global holdings in ETPs to be up about 8% from year-end 2023, and India is really leading the way with respect to this market. We have the SLV, we have the PSLV, but let's face it, India's ETP market is relatively new, and there seems to be robust demand.”
Looking at the Fed’s interest rate cut path, DiRienzo acknowledged that while the trajectory is more uncertain than it looked in September, he still expects silver prices to get a boost from further rate cuts.
“The analysts are still projecting at least two to three, if not more, cuts in 2025, and that will be great for the global precious metals complex, he said. “Traditionally, when the rates go lower people are looking to get out of certain investments and go to hard assets, of which silver is one, and we're looking forward to a very good 2025. 2024 has been great for silver we're up about 28%, 27% on the year, and the silver price has been quite resilient.”
When asked where he sees silver prices in 2025, DiRienzo said the Silver Institute doesn’t like giving price projections, but he’s encouraged by some of the numbers suggested by analysts.
“If you get to $36, $37, $38 [per ounce] next year, you're looking at an average price probably about $32, $33, and the market really would appreciate that,” he said. “Those banks […] that are making these projections are doing it for a reason, and the reason is that silver continues to be a valuable resource, and its future is extraordinarily bright with the Green Revolution.”
Silver prices are enjoying a strong performance on Tuesday, with spot silver holding above the $31 per ounce level, last trading at $31.005 for a gain of 1.70% on the session.
