Silver is emerging as a key focus for investors after a year in which gold repeatedly broke record highs. Over the past 12 months, the price of silver has risen by 29%, with those who timed the market well achieving gains of up to 59%. Analysts predict further increases, citing rising industrial demand and supply constraints.
Industrial Demand Driving Growth
Silver is an essential material in multiple industries, particularly in electronics and artificial intelligence (AI). According to the Silver Institute, industrial applications account for approximately 58% of global silver demand, a figure that is expected to grow further. The metal is crucial for the electrification of industries, renewable energy expansion, and the AI hardware boom, all of which are driving demand.
Christian Rauch, CEO of Degussa, highlights silver’s unique position: “Silver presents an excellent opportunity for investors, particularly those new to precious metals. Its lower price makes it more accessible than gold, and analysts forecast double-digit price growth this year, potentially reaching USD35 per troy ounce.”
Supply Constraints and Market Signals
A key factor influencing silver’s price trajectory is the supply outlook. Experts warn that silver mine production may struggle to keep pace with increasing demand. Michael Widmer, an analyst at Bank of America, cautions: “Insufficient investment in new mining projects is leading to a structural deficit, which will further constrain supply.” Recycling inefficiencies also mean much of the silver used in industrial applications is lost permanently, further tightening availability.
Another key market indicator suggesting silver’s upward momentum is the gold-silver ratio, which measures how many ounces of silver are required to purchase one ounce of gold. Historically, silver prices have tended to rise after periods of a high gold-silver ratio. Currently, the ratio stands at 91, significantly above its historical range of 50 to 70. Analysts see this as a strong bullish signal, indicating potential price increases in the coming months.
Tax-Efficient Silver Investment Opportunities
Despite changes to taxation on silver imports from non-EU countries in 2022, investors still have opportunities to make tax-efficient purchases. Degussa, one of Europe’s leading precious metals traders, offers a VAT-free silver storage solution, allowing clients to buy and sell silver without incurring value-added tax.
“Our clients can invest in silver with maximum efficiency through our tax-free storage option. Our experts are available to provide guidance at Degussa branches,” explains Rauch.
Silver’s Future Outlook
With growing demand, constrained supply, and favourable market signals, silver appears poised for further growth in the coming years. Analysts see it as an attractive opportunity for investors looking to benefit from the next precious metals rally.
For more information, visit www.degussa.com.