It's like Money Morning Global Resources Specialist Peter Krauth has been saying: A low silver price doesn't scare away investors; it draws them in.
As silver prices slumped 36% in 2013, retail investors took advantage of the dips and sent physical silver demand up 13% to an all-time high, according to World Silver Survey 2014.
Released Wednesday by the Silver Institute, the report showed the main driver of last year's robust silver demand was individual purchases of bars and coins. Add in a solid recovery in jewelry and silverware fabrication, and retail silver demand rose a whopping 76% in 2013.
Worldwide identifiable investment demand, which includes physical bar investments, coins, and exchange-traded fund (ETF) inventories, climbed 27% in 2013 to reach a three-year high of 247.2 million ounces.
Demand for physical bullion bars more than doubled last year, hitting a high of 127.2 million ounces. Purchases of silver coins and medals surged 38% to a record 118.5 million ounces. Silver ETF holdings increased a modest 48 tons. In contrast, gold ETFs experienced sharp outflows of 880 tons in 2013.
Gains in jewelry fabrication, up 10%, were attributed to an improving global economy. Global silverware fabrication meanwhile jumped 12% to a three-year high, buoyed by healthy gains in India and China.
Total physical silver demand reached a record 1,081 million ounces. Industrial application, the largest component of physical silver demand, slipped less than 1% to 586.6 million ounces, for 54% of total physical demand.
Spot silver ended 2013 at a bargain price of $19.50 an ounce.
"There's been a view in the market that sub-$20 silver is actually quite a good value as a lot of retail investors have this physically important $20 level in mind," Andrew Leyland a GFMS analyst told Reuters.
Not all industries saw an uptick in silver demand last year. Photography demand dropped 7% in 2013, the slowest percentage decline in nine years. And scrap silver demand slipped 24%, the largest drop on record. The decline took supply-side silver down to its lowest level since 2001.
Still, it was a stellar year for silver demand.
While overall industrial silver demand was a tad lower, gains were logged last year in these key Asian nations…