Physical silver investments are up 32% YoY according to the Silver Institute. This equates to an increase of about 64 million ounces of silver which means a total amount of 263 million ounces. This is the highest level in 6 years.
The increase is mainly due to India and the U.S. It is predicted that total physical silver demand in the U.S. will exceed 100 million ounces this year. This was last achieved in 2015 after the financial crisis.
India, which is traditionally a country where a lot is invested in silver, saw demand explode this year. Demand increased almost threefold this year compared to last year. This suggests the recovery of the Indian economy but also the relatively favorable silver price.
The increase in the U.S. was mainly pushed by traditional investors, but also many new investors were brought into the physical silver market. Social media groups where investors interested in physical silver gather is considered one of the main drivers.
The positive sentiment and the inflow of investors are largely due to macroeconomic factors. Negative real interest rates and the uncontrolled expansion of the currency supply lead to a decrease in purchasing power, which leads many investors to precious metals such as silver.
The silver market expects a supply deficit of about 7 million ounces this year. This will be the first deficit in the market in 6 years.