Silver Market News Today: Silver Surges Amid Supply Deficit

 

Silver Prices Are Up – Supply Deficits May Explain Why

Gold may have dominated headlines last month, but it may be silver’s time to shine. The precious metal shot up more than $1 this morning (June 6), cresting above the $31 psychological resistance level after a brief dip below $30 on June 4. On the year, silver is up more than 30% and remains above a 10-year high. The daily gold-silver ratio (GSR) is also down over 2.5,  hovering just below 76:1 as of noon. 

What is behind silver’s recent run? All precious metals are on the rise as USD continues to slip. The GSR decline this morning suggests that silver is outperforming its peer assets – at least in the short term. Experts point to a projected silver supply shortfall as a major reason why silver prices are up this June. Strong supply-demand fundamentals might be driving silver’s exceptional performance this week. 

Numismatic News reports: 

[The silver] shortfall amounts to almost 80 percent of annual global silver mining output. Another shortfall of 215 million ounces is forecasted for 2024. Just on this basis, there is pressure for higher silver prices.

Adding to silver’s shine is explosive demand for the metal in Asia – and particularly in China. Bloomberg reports a sharp uptick in Chinese demand for silver, citing the metal’s “dual uses” as both an investable asset and an industrial material as one reason for its explosive popularity heading into Q3 of 2024. As far as industrial use-cases are concerned, projected 2024 growth in the solar market could also explain increasing global demand for silver. 

A Deeper Dive: Chinese Demand Drives Silver Boom 

Business Insider reports that industrial uses in the solar panel sector continue to drive the bulk of China’s demand for silver. Chinese imports of silver hit a three-year high last December, and projections for late-2024 suggest that the precious metal will continue to be a hot commodity as China invests more capital into its industry-leading solar energy sector. The Independent reports that China “led the world” in its solar power adoption efforts in 2023, increasing its solar energy output by over 50%. The International Energy Agency concurred, calling China’s 2023 development the “fastest growth rate in decades.”

Investors in the West have certainly responded. Facing a fourth straight year of supply deficits, China’s silver stockpiles are being actively depleted to keep up with demand in the solar sector. Silver’s price might not yet reflect the full impact of the global shortage – or the international spike in demand for the metal. 

Bloomberg: #Silver imports to China: at 3-year high, well above monthly five-year average pic.twitter.com/AIZDuyw6Oa

— Peter Krauth (@peter_krauth) June 5, 2024

Silver may have been overshadowed by gold’s record-breaking year, but the evidence suggests that silver has already outpaced gold in 2024. As of June 6, silver is up 31.9% from the first of the year. By comparison, gold’s June 6 price puts its gains at only 14.5% on the year. The big question for metal investors: will silver’s dominance continue for the remainder of 2024? 

June 2024 Silver Price Forecast – Will Silver Outshine Gold In Q3? 

Silver’s recent performance is promising news for silver bulls. The precious metal continues to break through key psychological resistance levels, and promising fundamentals and an ongoing supply deficit suggest that silver is primed for a significant breakout in Q3 of 2024. How will silver stack up to gold this June? Gold’s record-breaking start to 2024 has a number of causes, but experts pinpoint three main reasons why gold smashed through several all-time highs in March, April, and May:

1. Geopolitical uncertainty led to increased investor interest in safe haven assets.
2. Speculation concerning Fed interest rate cuts drove retail investor interest in gold. 
3. Large purchases from central banks in the U.S. and China led to heightened investor speculation. 

While these factors certainly influenced a breakout run for gold, the demand that spurred gold’s price-action this quarter was more speculatory than industrial. Silver is another story – China’s industrial demand for the cheaper precious metal played a major role in its recent bull run. Some analysts believe that silver’s true bull run is only getting started. To date, silver price-action does not seem to have reflected the kind of strong speculation that drove gold to record heights last month. As the metal continues to trend above key psychological support levels, the intervention of generalist investors could play a more vital role in its price movements over the next few months. 

Will silver outshine gold in 2024? Investors will need to wait and see, but today’s price breakout signals that markets are only now beginning to react to a series of strong fundamentals – and an ongoing supply shortfall that could send the metal to even loftier heights.