Silver Institute: Potential for buying in silver market, as it is underpriced to gold; Broad-based demand seen in silver

There is much potential for silver as the market continues to see broad-based demand despite the recent price weakness, says the Silver Institute. 

The institute notes a potential for silver prices to regroup from recent losses saying that the gold:silver ratio averaged 73 in the first half of 2015, well above the 15-year average of around 58.

According to the latest report released by the nonprofit association, This indicates “silver is underpriced relative to gold” and provides increased potential for buying in the silver market, according to the report issued by the institution.

Consumer demand for silver jewelry was robust as jewelry imports in the U.S. rose 11% through the end of May. Imports from Thailand and China meanwhile jumped 18.5% and 14%, respectively, during the first five months of the year.

“GFMS Thomson Reuters (GFMS), the precious metals consultancy, estimates that globally silver jewelry will grow 5 percent in 2015,” according to the report.

There is also a significant industrial demand in silver. The use of the metal in the renewable energy sector (which is a key component in solar panels) is estimated to rise 8% this year to 65 million ounces.

The U.S. had a 76 percent increase in solar installations in the first quarter of 2015 when compared to last year, which spurred the increase in silver demand.

Moreover, while silver demand remains positive, the metal is expected to see a mounting supply deficit of around 57.7 million ounces, the third consecutive yearly deficit.

Investor demand is what marks one of the most significant differences between gold and silver. Despite active start to the year, the yellow metal is now negative on the year, the report underscored.

However, the body noted that global silver ETF holdings have risen by more than 4.7 million ounces as of July 24, “indicating that these investors likely have a more positive longer-term view of the silver price.”

There is also a pickup in silver bullion demand, although the start to the year was slow. Global coins sales in the first half of 2015 were down about 6% compared to the same time period last year; however, sales were still the fifth highest on record.