Silver Market Squeeze Tightens Amid Strong Industrial Demand and Supply Deficit
The silver market is experiencing a structural squeeze due to a supply-demand imbalance that is widening without any apparent relief. The price of silver has climbed 6.5% in the past week, reaching $69.01 an ounce on Friday.
The Shanghai Gold Exchange reported a premium of 12.68% over the Western spot price, indicating a dislocation typical of industrial buyers scrambling for metal and local inventories running thin. China's photovoltaic sector, a major consumer of silver, shows no signs of easing its appetite.
India International Bullion Exchange recorded imports of 89.81 tonnes in August, ending a six-month drought caused by new licensing rules. The pent-up demand is now being released into a market with little spare supply.
The Silver Institute projects a sixth consecutive annual supply deficit this year, with the shortfall ranging between 46 and 67 million ounces. The cumulative supply deficit for 2020 through 2026 is estimated at 1.323 billion ounces.