Since the 1990s, much of Gold’s supply in the market has come from Gold bullion sales from global central banks’ vaults. Because of the market crash in 2008, the rate at which global central banks were selling Gold slowed. The decrease of sales from global central banks coupled with the declining production beginning in 2000 increased the yellow metal’s price. As a general rule, a reduction in the supply of Gold increases the Gold price.
Despite finite supply, the demand for Gold has only grown. Gold is prevalent in many cultures, including China, where Gold bars are a conventional form of saving, and India, the second-largest Gold-consuming nation in the world. Demand for Gold has also grown among investors. Even during the COVID-19 pandemic, which ravaged the financial market, the Gold price returned 25% in 2020, supported by investor demand.
Due to advancements in medical science, technology and aesthetic preferences, Silver supply and demand has fluctuated a great deal through the centuries. Today, Silver’s demand is higher than ever because it is a crucial component of widely manufactured electronics, including computers, mobile phones and solar panels.
Global Silver production fell for the fifth consecutive year in 2020. The drop resulted from declining grades at several primary Silver mines and disruption-related losses at some major Silver producers. Much like Gold, Silver’s demand will likely continue to grow despite the limited supply.
According to the Silver Institute, Silver’s global demand will rise to 1.025 billion ounces in 2021, its highest in eight years. Silver has many uses, including industrial applications, like photovoltaics, the process of converting solar energy into direct current energy, jewelry creation, medicinal uses and minting Silver investment products. Physical investment, which covers Silver bullion coin and bar purchases, is expected to achieve a six-year high in 2021 of 257 million ounces.