Spot silver prices climbed higher in each of the past seven trading sessions. For those interested in silver investing, know this; it’s just the beginning. The surging demand for the grey metal will soon push silver price to $30.00, $45.00, or even $60.00 and higher. Here’s why.
Silver Jewelry Demand Surging in the U.S.
The Silver Institute recently reported that jewelry demand was strong for the grey metal in the first half of 2015. (Source: The Silver Institute, July 28, 2015.)
In the United States, consumer demand for silver jewelry has been rising. Until the end of May, silver jewelry imported to the U.S. surged 11%. Moreover, in dollar terms, the U.S. is the largest importer of silver jewelry.
Americans’ surging demand for silver resulted in more grey metal shifting from the East to the West. By the end of May, U.S. imports from Thailand and China jumped up 18.5% and 14.0%, respectively.
For the entire year of 2015, GFMS Thomson Reuters expects silver jewelry to grow by five percent globally.
The solar industry is giving a big boost to silver demand. Silver is a crucial part in the making of solar panels as it is used to conduct electricity out of solar cells. The use of silver in the manufacturing of solar panels is on a massive scale: it takes approximately 2.8 million ounces of silver to generate one gigawatt of electricity from solar panels.
Shifting to renewable energy has become a global trend. In the first quarter of 2015, the U.S. saw a massive 76% year-over-year increase in solar panel installations. China and India are also launching aggressive installation plans in solar energy. For full-year 2015, silver demand from the solar industry is expected to increase eight percent to 65 million ounces.
Silver is also an essential catalyst in the production of ethylene oxide. Ethylene oxide is the foundation for making plastics such as polyester, an essential textile used in many types of clothing. Demand for silver from ethylene oxide producers has been surging and is expected to reach 8.6 million ounces in 2015. That would be a 61% increase!
Silver is the best conductor of electricity known to man. Its excellent electrical conductivity makes it an essential component in many electronic devices. This year, the demand for silver by computer and tablets producers is expected to fall by 4.5%, while the silver demand from cell phone makers is expected to rise by three percent. Overall, electronics demand for silver is projected to grow 0.4% in 2015.
Investors’ Interest Growing
Despite the recent downfall of precious metals prices, silver investors haven’t given up on the grey metal. In fact, their long-term expectation of silver prices is quite bullish. By July 24th of this year, global silver ETF holdings increased by 4.7 million ounces!
Investors also rushed towards silver bullion. On July 7th, the U.S. Mint reported that 2015 American Eagle silver bullion coins were sold out due to “significant demand.” This was in line with the law of supply and demand: as the price of silver declines, demand for it increases. In the month of June, silver coin sales totaled 4.84 million ounces—more than double the amount sold in May. (Source: Reuters, last accessed August 13, 2015.
Big Squeeze Already Happening?
Based on the above, our silver price forecast for 2015 remains bullish. Here on Profit Confidential, we have said many times that the market conditions for physical silver are getting tighter, and a big squeeze is coming. The seven-day winning streak of spot silver just confirmed our expectation.
So, How Can Investors Take Advantage of the Surging Silver Prices?
Despite the recent surge, silver prices are still at extremely low levels even compared to other precious metals. The oversold grey metal represents a classic “buy low” opportunity.
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