World silver prices have been in freefall for most of the month: the precious metal cost $26.34 per troy ounce on May 4, it was down to $22.82 by May 25, with no end in sight to the price decline .
However, analyzing the dynamics of silver prices in the months preceding 2023, we see that this decline was not the only one. Silver was trading at $24.33 on January 2, then fell to $20.19 on March 9. Its value then increased, reaching $25.97 on April 13, before changing course on April 26 and falling to $24.87. Subsequently, silver rose in price reaching the above mentioned level of $26.34 and then fell again, reaching $22.82 = May 25th. However, it climbed back to $23.16 on May 26.
There can be several reasons for the decline in silver prices. First, we look at the Silver Institute’s forecast for 2023. According to this, raw material extraction is expected to increase by 2% to 842.1 million ounces (in terms of pure metal). A significant role will be played by the development of lead and zinc deposits, where silver is often present in considerable quantities, and according to estimates by the International Lead and Zinc Group, lead mining is expected to increase by 2.8% in 2023 to 4.6 million tons, while zinc mining will increase by 3% to 12.9 million tons. The supply of silver on the global market could increase by 2% to 1.025 billion ounces.
On the other hand, silver consumption in 2023 will decrease by 8% to 1.167 billion ounces. Of these, silver use for jewelry production will decline 15% to 199,500 ounces, for silverware production 24% to 55,700 ounces. Bullion and coin purchases could decline 7% to 309,000 ounces.
All of the above is actually possible. The extraction of raw materials has seriously increased in North and South America and Asia, and the supply of silver by traders on the world market has also become active. At the same time, the demand for silver jewelry in the United States and the European Union has decreased due to food inflation and the high cost of public services, which have led to a reduction in disposable income for the population – in these conditions, there is no room for silver jewelry. In India, it reached saturation in 2022 and is now reversing. In addition, the consumption of silver in industry is decreasing due to the difficulties faced by the real sector in the United States and the European Union. In China, he’s feeling better, though his recovery after quarantine restrictions during the coronavirus pandemic isn’t as fast as it could be.
Rising gold prices played against rising silver prices, which until recently made gold investments much more attractive. Now, however, both are declining due to the strengthening US dollar and rising US government bond yields. Therefore, in the next two weeks, fluctuations in the price of silver can be expected in the range of 20-24 dollars, until it becomes clear how one of the largest economies in the world will behave.