Silver gained 3.05% in a month on Dollar weakness, tracking gains from Gold - Kedia Advisory
Strengths
* Silver gained 3.05% in a month on Dollar weakness, tracking gains from Gold.
* Safe-haven demand amid trade tensions – US tariffs and countermeasures by China drive silver buying.
* Weaker US Dollar – Dollar index fell as European leaders supported a Ukraine peace deal.
* Industrial silver demand growth – Silver industrial fabrication projected to grow 3% in 2025, surpassing 700 mn ounces.
* Improving investment sentiment – Tactical investors covering shorts, boosting futures and spot silver prices.
* US public debt concerns – Rising debt levels drive investor interest in safe-haven metals like silver and gold.
Weaknesses
* Weak jewellery demand in India and China – Indian silver jewellery demand to decline 6% due to high domestic prices.
* US silver coin sales drop – Purchases fell 27% YoY in January to 3.5 moz, lowest since 2018.
* Mining production increase – Hecla Mining reported a 13% YoY increase in silver output to 16.2 moz.
* Higher silver mine output – Global silver supply projected to grow 3% to 1.05 bn ounces in 2025.
* Impact of strong Treasury yields – Rising US bond yields may limit silver investment despite macro uncertainties
Opportunities
* Growing silver ETF inflows – Institutional investors may turn to silver amid equity overvaluation concerns.
* China’s economic recovery – China’s Manufacturing number recovered, any other policy support or stimulus could revive Chinese silver consumption.
* US trade policy risks – Tariffs and economic uncertainty could further boost silver’s safe-haven appeal.
* Geopolitical uncertainty support – Continued Russia-Ukraine tensions keep silver in focus as a risk hedge.
* Recycling limitations – Silver recycling still insufficient to offset growing demand.
* Silver market deficit – Deficit expected 19% to 149 mn ounces, reducing supply-side price support.
Threats
* Seasonally bearish gold market – Historical patterns suggest gold may correct 6-9%, dragging silver down.
* Profit-taking in silver investments – Short-term traders may exit positions after recent price spikes.
* Slower global economic growth – Weaker industrial demand could cap silver’s upside despite long-term gains.
* Declining Indian demand – Domestic liquidation trends could weaken silver’s price support from key Asian markets.
* Mining expansions adding supply – A 2% rise in mine output to 844 mn ounces could limit price appreciation.
* Silver Market Deficit: The silver market is expected to remain in deficit for the fifth consecutive year, with a shortfall of 149 Moz, a 19% reduction from 2024 but still historically significant.
* Industrial Demand Growth: Silver industrial fabrication is projected to rise by 3% to over 700 Moz, driven by photovoltaics, automotive electrification, and AI-related consumer electronics.
* Physical Investment Uptick: Silver physical investment is forecast to grow by 3%, supported by stronger demand in Europe and North America, while high prices in India may trigger some liquidations.
* Decline in Jewelry & Silverware Demand: Jewelry demand is expected to drop by 6%, mainly due to high prices in India and cautious Chinese consumer spending, while silverware demand is set to fall by 16%.
* Silver Supply Growth: Global silver supply will increase by 3% to 1.05 billion ounces, driven by higher mine production (844 Moz) and a 5% rise in recycling, particularly from industrial scrap.
* Mining Expansion: Increased silver output is expected in China, Canada, Chile, and Morocco, with key contributions from base metal and gold operations, along with ramp-ups at major mining projects.
* Geopolitical & Economic Impact: Investor sentiment towards silver has improved due to geopolitical uncertainties, trade concerns under Trump’s second term, and inflationary pressures, despite headwinds from a strong dollar.
* Impact of US Tariffs: Fears over Trump’s potential tariff policies have fueled silver price recovery, but concerns about global economic growth, particularly in China, could limit investor enthusiasm in industrial metals.
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