Prices of gold and palladium have been significantly higher than silver since 2011, suggesting that silver could be a “strategic bargain” for Russia. On April 29, 2011, COMEX silver closed at $48.59 per ounce, while it is now trading significantly lower.
“Rising industrial demand for silver, especially in photovoltaic and electrical conductivity applications, is creating tight supply conditions,” said analysts at The Silver Institute. The institute predicts a combined shortfall of 663 million ounces in the global silver supply between 2022 and 2024.
In recent years, central banks around the world have aggressively increased their gold reserves amid economic uncertainties, with countries such as Poland now holding more gold reserves than Britain. Russia’s move to include silver adds to recent expansions into platinum and palladium reserves, leveraging its status as a top global producer of these metals.
Market implications and demand prospects
Experts speculate that Russia’s decision to acquire silver could boost its price by at least 50% over the next 24 months. With silver’s increasing industrial applications and tight supply conditions, Russia’s strategic move could encourage other central banks to follow suit.
Market participants will closely monitor economic data from China and the US as shifts in global demand and policy could impact the price trajectory for industrial and precious metals.
If successful, Russia’s diversification into silver could be a major turning point for the global precious metals market.