Every key demand segment, except photography, is configured to record a new peak. Industrial demand is on track to grow to 539 million ounces (Moz). The physical demand for silver coins and ingots is the most volatile demand category (and it's difficult to get real-time data in the middle of the year). Silver's response to current macroeconomic challenges has been to follow its traditional pattern of reaction with more volatility than gold.
In addition to investor confidence, the trend in the price of silver has been supported by its increasing use in industrial environments, which account for approximately half of the annual demand for the metal. In the photograph, which represents a small and decreasing part of the demand for silver, there was a small uptick after COVID due to the tendency to catch up with radiographs in healthcare after the decrease in lockdowns. The current environment may be dominated by risk-averse behavior, but that is not the main factor for long-term demand for silver, especially given its dual nature as a precious metal and an industrial metal. There were several trends that drove demand for silver, including strong demand for consumer electronics amid the transition to remote work, investment in 5G infrastructure and the increase in the use of silver in the green economy, especially in solar photovoltaic (PV) panels.
On the demand side, all segments of silver demand are rebounding, led by industrial, jewelry and physical investment. We view the history of the energy transition as a major force for silver demand this year and in future years. Industry forecasts project that demand for silver for electric vehicles is likely to eventually exceed the volume of silver used in photovoltaic energy. Although the supply of silver faces some restrictive trends, the upturn in demand could be sustainable, thanks to the fundamental role of silver in growing green energy initiatives.
Overall industrial demand represents approximately half of the annual demand for silver, and photovoltaic demand represents approximately one-fifth of all industrial production (and its share is increasing, since photovoltaic energy is growing faster than general industrial use). The increase in demand for silver in the solar photovoltaic energy sector could receive a boost in the coming years that could support the value of silver in the future.