Global Silver jewelry scrap trend 2021!

Is a bull market for silver prices, a driving force!

Metal Focus said, if you were a mining company, it is silver jewelry’s net call on the bullion market that is potentially of great interest. By net call, we mean jewelry fabrication less the recycling of old jewelry (this excludes process/production scrap). Time to time Silver Institute makes such call.  Silver jewelry’s net demand has risen more strongly than has the headline number. 

To be precise, from a low in 2011, net demand by 2019 had grown by an impressive 51%, whereas jewelry fabrication on a gross basis had increased by a less heady 23%. 

This year however, net fabrication is expected to fall by 25% and so by a little more than the gross decline of 23%. Looking at the chart in more detail, the comparatively flat nature of silver jewelry recycling may be surprising. 

A key reason for this is that much of silver jewelry’s sales are in Western countries, where high mark-ups and low prices per piece mean consumers are much less motivated to sell old silver than they might gold jewelry. 

In fact, it is quite common for scrap from Western countries to come overwhelmingly from the recycling of slow selling stocks by manufacturers and/or distributors, rather than from consumers. A second is that in India (the world’s largest single silver jewelry market in weight terms) consumers rarely sell back old jewelry. This is primarily due to the financial losses likely to be incurred, which in turn stem partly from the low purity of many items. 

Looking ahead, we forecast that global jewelry scrap will see a notable gain in 2021 and stay high in 2022 due to expectations of a bull market in those years for silver prices. However, the levels reached should stay well below those seen in the early 2010s. 

At the same time, we are confident that gross silver jewelry demand will recover over the next few years, despite high silver prices initially affecting the price-sensitive Indian market. As a result, we expect both gross and net jewelry demand to establish record highs in a few years’ time.