“Greater industrial demand is the main catalyst for growing global demand for the white metal, and this sector is expected to reach a new annual peak this year,” reads the report of the Silver Institute, an international non-profit association of representatives of the silver industry. Currently silver is mainly used for industrial purposes and widely used in the production of cars, solar panels, jewelry and electronics.
“We think silver is going to have a great year, especially in terms of demand,” Michael DiRienzo, executive director of the Silver Institute, told CNBC. According to the London Stock Exchange Group, the price of silver will reach $30 per ounce, which would be the highest level in 10 years. Silver last reached this valuation in February 2013.
A treasure for India
The Institute assumes that demand will increase this year silver cutlery by 9 percent and jewelry by 6 percent They are expected to be the largest recipient of jewelry products India. The report stated that recovery on the consumer electronics market also can also provide an extra boost silver market.
But before that happens slowdown of the Chinese economy and less likelihood of discounts interest rates in the US at the beginning of the year they can cut back on it for a short period of time silver investments. However, in the second half of the year the situation may reverse. Experts expect that thenUnited States Federal Reserve can start lowering interest rates.
Better than gold?
Because of the wide industrial uses of silver, its valuation is closely related to the state of the entire economy or the business cycle. On the other hand gold prices they tend to increase during periods of economic weakness or geopolitical uncertainty. Therefore, silver is more sensitive to economic turbulence and its price is more volatile than the price of gold. This relationship can be monitored using gold to silver ratio, which determines how many ounces of silver it takes to buy one ounce of gold. Currently It takes 90 ounces of silver to buy one ounce of gold.
