After many action-packed years, precious metals like silver and gold witnessed 8 percent and 4 percent returns, respectively, in 2021. Although policy decisions by the US Federal Reserve could weigh on prices, factors such as geopolitical tensions, inflationary pressure and rising overall safe-haven appeal can support silver prices. With the volatility, prices may drop to as low as Rs 58,500, which might be an excellent opportunity to accumulate silver for a target of Rs 72,500 to Rs 80,000 in 2022.
How is silver slated to outperform in 2022?
This year, demand for silver will primarily be focussed on the industrial side. The tilt towards institutional investors and large retail investors is high towards silver ETFs (exchange traded funds). Investment demand and silver (as an industrial metal) will be the most important drivers as far as silver prices are concerned.
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Investment demand
If we compare supply and demand, supply numbers have witnessed only a 5 More:percent move from 2020-21, whereas the demand side has garnered an over 15 percent move during the same period. As per research by the Silver Institute, the demand for silver globally would increase to 1.112 billion oz in 2022. Record-breaking silver industrial fabrication is responsible for such a rise. It would expectedly enhance by 5 percent, with the growing use of silver in both traditional and critical green technologies.
Moreover, investments in silver in jewellery and silverware would strengthen by 11 percent and 21 percent (respectively) during this year. On the other hand, investors can now easily invest in silver ETFs to increase the metal price amid overwhelming demand.
Silver as an industrial metal
Gold has outperformed silver for so long, with the gold-silver ratio rising from 65 to 80 levels. Unlike gold, this precious metal is extensively used in industrial applications, including medical devices, electric vehicles, and solar panels. The shift towards green technologies is critical for uplifting silver prices. Silver demand has surpassed 1 billion ounces for the first time since 2015 due to rising purchases in the investment and industrial segments.
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Overall, silver prices will accomplish a significant upside due to rising inflationary pressure and industrial demand after the metal got a heavy push from various uncertainties like the Covid-19 pandemic.
Expected silver prices during 2022-25
Experts predict this precious metal will reach Rs 1,21,000 per kilogram by 2025.
Silver will attract a vast pool of investors switching to the silver markets in 2022 through silver ETFs or direct buying. This year has emerged as the ideal time to purchase silver. As this metal surpasses gold, its prices will undoubtedly continue to rise (rather than fall) throughout this year and the future.
The author is Director at MyGoldKart
Disclaimer: The views and investment tips expressed by experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before making any investment decisions.
