Retail investors buy silver bars as a cheaper alternative to gold
China’s silver imports rose by +78% month-on-month, reaching a record ~836 tons in March. This is +173% above the 10-year seasonal average for March. Since the beginning of the year, silver imports have reached ~1,626 tons – the highest level on record. This demand is the basis of the huge price difference between the Shanghai exchanges (mainly physical transactions) and those in New York and London (mainly paper transactions). In China, silver is traded about 13% more expensive, which attracts all the physical flow.
The strong demand in China is due to retail investors buying small silver bars as a cheaper alternative to gold, as well as solar panel manufacturers who are accelerating production before the removal of export tax breaks from April 1.
Overall, this year is shaping up to be the sixth consecutive year of global deficit according to the World Silver Survey 2026. Interestingly, a 3% decline in industrial silver consumption is expected, due to high prices that are leading to a demand for substitutes. A decline is also expected in jewelry demand. Investment silver, however, will see a very large growth (+14%). In the end, demand does not change significantly.
On the other hand, mining and recycling are growing too slowly despite record prices. Silver mining companies simply cannot keep up. There are no large new deposits, and primary silver mines produce only 26% of global production. The rest comes mainly as side extraction from zinc, lead and copper deposits, where the price of silver is not of significant importance.
Illustrative photo: https://www.pexels.com/photo/silver-round-coin-on-black-surface-8442353/
