Silver had everything going for it in 2014.
Apart from receiving a shot in the arm from Indian gold import curbs and becoming real cheap versus the yellow metal, the silver price was supposed to be boosted by rising fabrication demand.
Chinese imports were surging as silver used in solar panels more than made up for decline in the photographic industry.
And batteries were on everybody’s brains from Tesla gigafactories in the US to giant electricity storage programs in China.
Increased usage in electronic devices and autos (in tiny quantities making recycling uneconomical; nice) and low stockpiles were other factors providing tailwinds during the year.
Combined with a leap in coin sales and record physical silver-backed ETF inflows – topping 20,000t in October – 2014 should’ve been a banner year for silver.
But the devil’s metal lived up to its name and after an uncannily quiet year (even for silver) ended 2014 down 20%, after all attempts to rally quickly faded.
Just about everyone predicted a stronger silver price in 2014 and despite dashed expectations last year all the positives on the demand side are still in place.
And increased usage as an anti-bacterial agent, ball bearings, inks, medical and water purification, albeit small, do start to add up (to 20mozpa by some estimates).
Investment demand in coins and bars is expected to stay strong, while retail investors are not predicted to pull tonnes from ETF vaults like their gold counterparts.
Mined silver supply will be stagnant or decline while very low rates of recycling – already back to levels last seen in 1999 – should continue to keep metal off the market.
Some 75% of all silver is mined as a byproduct so shuttering high cost gold and copper mines will further restrict supply during the year.
At 74 at the start of 2015 versus a long-term ratio of 60 to an ounce of gold, silver should also ride the coattails of gold higher.
$18 an ounce and rising.
ETF investors who bought during 2012-2013 have a crisis of confidence and start liquidating en masse.
Schwaz, Austria: Tourists explore Silberbergwerk, the biggest silver mine of the middle ages Image by Sasimoto