The demand for silver reached a new all-time high of 1.242 billion ounces (boz) in 2022, driven mostly by a doubling in jewelry demand and a 188% increase in exchange-traded fund (ETF) investment in India. According to the World Silver Survey 2023, this pushed the market deficit to a record high of 237.7 million ounces, wiping out surpluses built up over the previous decade.
The total demand for silver peaked in 2022, with new highs in all of the vital demand categories. The Silver Institute in New York City reported on Wednesday that jewelry production using silver increased by 29% to a record-high 234.1 million ounces (moz) in 2022.
Sustained interest in silver
India saw the most significant increase in demand, at 24%, followed by East Asia (up 7%) and North America (up 6%) in that order. The demand in Europe, meanwhile, fell by 6%.
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It was said that, as with jewelry, gains in silverware were almost entirely due to India. This is because of rising employment and wealth in the country following the 2020 pandemic.
In 2022, India brought in a whopping 9,500 metric tons of silver. According to Manav Modi, an Motilal Oswal Financial Services Ltd analyst specializing in commodities and currencies, “Silver was considered an alternative to gold for jewelry and investment.”
Demand records have been broken
For the sixth year in a row, net physical silver investment increased, reaching a record-high 332.9 moz. The study found that India emerged as the top performer last year due to increased investment in silver as a result of price drops and subsequent bargain hunting.
Jewelry and silverware had a 29% and 80% growth in demand, while industrial use of the precious metal saw a 5% increase. The outcome was an all-time high in silver consumption across the world.
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Since 2020, global demand has increased by 38% as world economies recover from the pandemic, it stated. However, this was the second straight yearly and largest deficit ever.
“The combined shortfalls of the previous two years comfortably offset the cumulative surpluses of the last 11 years,” said a London-based independent precious metals consultancy.
Traders are cashing in
Prior cycle highs around $24.50 are seen as crucial support for bulls. As long as silver prices are higher than that mark, the outlook is bright for the next several days. However, if silver prices go below that support, they may reach $23.
The bulls’ objective is the $26 level, the cycle high from this year. However, after a 25% bounce from March lows, silver looks overbought and will likely see some profit-taking that will pull the price down in the coming days.
Silver 1D chart, source: tradingview.com, author’s analysis
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