Surging Silver Prices in 2024: Industrial Demand and Supply Deficits Drive Market Growth

In May, silver surged above $30 per ounce for the first time in over a decade, spurred by expectations of a potential reduction in US interest rates by the Federal Reserve and heightened global geopolitical tensions. This marked a notable recovery for the metal, which had seen fluctuating prices over the years. The current rise is largely attributed to strong industrial demand and ongoing supply shortages, with experts predicting a continuation of these trends into 2024. With silver expected to experience its fourth consecutive year of structural market deficits, the outlook appears bullish, driven largely by industrial applications and increased demand from China.

Historically, silver has seen significant price swings, spiking to $36 per ounce in the 1980s before falling into relative obscurity during the 1990s. The metal's fortunes changed in the 2000s with the onset of China’s commodities boom, followed by a surge during the 2007-09 Global Financial Crisis. Prices briefly approached $50 per ounce in 2011 before stabilising in the high teens during the 2010s. However, by the early 2020s, silver found a new floor around $20 per ounce, with recent increases pushing prices above $30 per ounce in 2024.

The widening supply deficit, coupled with strong industrial demand, underpins silver’s price strength. In 2023, silver demand outstripped supply by a significant margin, resulting in a deficit of 184.3 million ounces. This shortfall, while lower than previous years, remains one of the largest on record. Industrial applications, particularly in green technologies such as photovoltaic (PV) solar cells, played a major role in driving demand, with industrial offtake reaching a record 654.4 million ounces.

Looking ahead, the global silver market is expected to see a further widening of the supply deficit in 2024, with demand anticipated to rise by 2%, driven by continued growth in the solar energy sector and other green-related applications. This has led to bullish forecasts for silver prices, with estimates predicting prices could reach $36 per ounce by the end of 2024 and $38 per ounce by mid-2025. The metal's critical role in industrial applications, combined with limited supply growth, suggests that silver is poised for continued strength in the years ahead.