Silver may not seem to be high on the list of good investments but analysts are telling people that silver prices are set to rise as soon as the world recovers from the recent spate of interest rate hikes.
While silver prices are currently down by 4%, settling at about $23 per troy ounce, OANDA senior market analyst Ed Moya believes that it could end 2023 at $24 an ounce and its popularity as an investment could surge once we are sure that the Federal Reserve has finally opted to end its rate-hiking spree.
At the same time, analysts say that the booming solar power sector will be a prime catalyst for the resurgence of silver in the coming months, along with a constantly limited supply of the precious metal due to difficulty of extracting it from raw ore.
Dearth and Demand
As of 2022, the global silver market found itself short of around 237.7 million ounces of the metal. Experts at the Silver Institute warn that the market will continue to be undersupplied for years to come, though any shortfall could be supplemented by massive stocks held aboveground, along with significant quantities in the hands of individuals.
But the solar power industry stands to become the largest institutional customer for the silver sector, seeing how the current demand for silver to use in the production of photovoltaic (PV) cells is now thrice as high as it was back in 2014. This means that the renewables sector is responsible for around 14% of the total global demand for silver. With this in mind, the Silver Institute forecasts that the industry’s overall demand for silver could hit 161 million ounces by the end of the year.
Should new PV installations go beyond the critical 400-gigawatt mark by 2025, it is possible that the solar industry’s demand for silver could go to as high as 180 million ounces over the next couple of years.