Understanding the Silver Bullion Demands in the Current Global Situations

Understanding the Silver Bullion Demands in the Current Global Situations from North Carolina Lifestyle Blogger Adventures of Frugal Mom

The demand-supply function largely influences the price of precious metals. Silver bullions are popular amongst investors for diversifying their portfolio. The silver bullion typically comprises coins, bars, and ingots.   

Suppliers like Goldstackers have a wide range for those who admire the yellow metal while exploring and stacking the white metal, too. An increase in demand, coupled with a limited supply, leads to a rise in the metal price. 

Conversely, a declined demand or excessive supply results in a price decrease.  The demand and supply depend on the quantity mined, the consumption of silver for industrial purposes, and other micro and macroeconomic factors. 

The current situation is unprecedented, and it becomes even more important to understand the demand of the metal in the global scenario. 

The Pandemic   

The global crisis resulting from the COVID-19 pandemic has not only caused an adverse impact on human health but has also led to deteriorating economies. It has caused disruptions in the production and supply chain management. 

Measures like lockdown and restrictions on economic activities to curtail the virus are essential; however, they have sent tremors to the economy. The current challenges require collaborative international efforts. 

Performance of the White Metal 

The metal is widely consumed in industrial products like semiconductors, batteries, LED lighting, and water purification. It also finds its application in dentistry and motherboards. The metal is thus a financial as well as an industrial commodity.

The white metal had witnessed its 11 year low in Mar 2020 when the investors briefly exited their positions at the start of the lockdowns. There was a dip in the demand of the metal due to the halt in industrial activities. Moreover, there was a disturbance in mining activities, particularly in Mexico, which account for almost 25% of the overall production. 

With the anticipated revival of the industries and a recommencement of mining in Mexico, the white metal came back stronger. The metal is considered subordinate to gold and appears to follow the yellow metal’s price trend. The month of Jul 2020 witnessed silver bullion gains surpassing the returns on the gold. The metal crossed the $20 mark, which yielded almost 61% against the 15% provided by gold. 

The Anticipated Demand

The economies are opening up gradually, and there is an anticipated increase in the physical metal’s industrial demand. There has been an increased awareness of the importance of building an environmentally friendly industry. Silver is an essential component of solar panels and other electronics for the green business. Further, the metal is also expected to be in demand in the 5G network segment. 

The metal is thus anticipated to be in a strong position soon. Analysts like Goldstackers are bullish on the metal, as the COVID-19 vaccine would restore normalcy in industrial production, thereby increasing the metal consumption further. Investors can buy the physical form of the metal as coins, bars, or ingots.  

Hence, you may want to consider investing in the physical form of the white metal. These bullions are easy to purchase and convenient to store.

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