Sourcing

Silver Price Expected to Rise Another 39% in 2021

SourcingNov 19, 2020

Silver Price Expected to Rise Another 39% in 2021

This follows a significant uptick this year, according to the Silver Institute, even as global jewelry demand was down.

20201119_Silver-header.jpg
The 2020 average silver price is expected to increase 27 percent, while the global silver jewelry demand is predicted to decrease 23 percent. Pictured here is the “Amanda” sterling silver bracelet from Lika Behar.

New York—Much as it has done for gold this year, the COVID-19 pandemic boosted the silver price in 2020 and it’s expected to continue its rise.

The metal’s price started the year soft, but began taking off throughout the pandemic, Metals Focus Managing Director Philip Newman said in a webinar hosted Tuesday by the Silver Institute to discuss its Interim Silver Market Review.

Its price has grown 38 percent through the year as the crisis led to an uptick in safe-haven demand.

He said price is predicted to rise 27 percent year-over-year to average $20.60 in 2020, which would mark the highest annual average since 2013.

Newman also noted silver is expected to remain strong and continue to outperform gold, though perhaps not as dramatically as it has been doing in 2020 as the uncertain economic outlook could affect prices going forward.

Still, the Silver Institute predicts a further 39 percent increase in price in 2021 to average around $28.60.

Along with the price increase, there has been a major improvement in the gold-to-silver ratio—representing the amount of silver it takes to purchase one ounce of gold—which Newman said reached an “unprecedented” peak of 127:1 in March.

It has since fallen again to 76:1 this month, he noted, around which he expects it to stay for a while.

But as price has risen, silver jewelry demand has gone down.

Global silver jewelry demand is expected to fall 23 percent in 2020 to 153.6 million ounces, according to the Silver Institute, underpinned largely by heavy losses in India resulting from widespread lockdowns hitting disposable incomes and leading to a weakened economy.

Global demand also weakened in the U.S., though Newman said the extent of the decline was more modest than for gold and added that a “sharp turnaround” is anticipated soon for the market suppliers.

Mine production for silver will also likely go down overall, with an expected decline of 6.3 percent in 2020 to hit 780.1 million ounces, according to Metals Focus Director of Mine Supply Adam Webb. This result comes, not surprisingly, after lockdowns implemented by major silver producers in the first half of the year required a temporary halt in production.

This goes against the firm’s prediction earlier in the year total production would be up in 2020.

Most mines have returned to full production rates, but the continued risk of outbreaks of COVID-19

could still impact output from individual operations in the future.
Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

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