by Peter Schiff, Schiff Gold:
Jewelry production is an important driver of overall silver demand. In 2022, the amount of silver used in jewelry was up around 29% as overall silver demand hit record levels. Silver jewelry production used around 235 million ounces of silver.
And according to a recent survey by the Silver Institute, silver jewelry sales are on the rise.
The Silver Institute created the survey to gauge various aspects of the silver jewelry market in the US in 2022. Results of the survey showed 61% of retailers said that they increased their silver jewelry inventory in 2022 by an average of 21%.
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“We are encouraged that silver jewelry purchases and overall optimism for silver’s ongoing performance in the US retail jewelry sector remain so strong,” Silver Institute Michael DiRienzo said.
Here are some other highlights from the survey.
- 61% of retailers said that they increased their silver jewelry inventory in 2022 by an average of 21%
- 51% said silver jewelry is essential to their business, while 27% said it is important.
- Retailers said their silver jewelry sales, as a percentage of their overall jewelry sales, averaged 28% of their unit volume and 19% of their dollar volume.
- The average store growth in 2022 for silver jewelry sales was 14%.
- The best-maintained margins during the Holiday Season were:
- Silver Jewelry 38%
- Diamond Jewelry 21%
- Bridal Jewelry 21%
- Gold Jewelry 18%
- Platinum Jewelry 2%
- The age group buying the most silver jewelry is 20-40, according to 52% of the retailers.
- 88% of retailers say they are optimistic that silver jewelry sales will continue to grow for the next several years.
Silver jewelry isn’t just popular in the US. India has a huge appetite for silver that is also growing. What the Silver Institute describes as “an unprecedented rebound in Indian demand” helped drive the overall demand for silver jewelry higher. “This has partly been driven by strong inventory replenishment ahead of the festive and wedding season, following heavy stock depletion in 2021.”
Other aspects of silver demand are also increasing. An Australian study projects solar cells may use most of the world’s silver reserves by 2050. Meanwhile, physical investment demand jumped by about 18% to approximately 329 million ounces in 2022. According to the Silver Institute, “Support has come from investor fears of high inflation, the Russia-Ukraine war, recessionary concerns, mistrust in government, and buying on price dips. The rise was boosted further by a (near-doubling) of Indian demand, a recovery from a slump last year, with investors often taking advantage of lower rupee prices.”
A silver-gold ratio currently well over 80-1 indicates that silver is drastically undervalued compared to gold. To put that into perspective, the average in the modern era has been between 40:1 and 50:1. Historically, the ratio has always returned to that mean. And when it does, it does it with a vengeance. The ratio fell to 30-1 in 2011 and below 20-1 in 1979.
