U.S. demand for silver as an investment vehicle is expected to pick up in 2018 as investors move more funds into precious metals instead of the stock market, according to the latest report from The Silver Institute.

“Coin demand almost halved to 73 million ounces in 2017,” according to the Institute. “Much of the weakness was concentrated in the United States where the rising stock market diverted some capital away from physical precious metals. Investment is forecast to flow back into precious metals, benefiting silver bar and coin demand this year.”

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Silver demand from industrial applications, comprising approximately 60 percent of total silver demand in 2017, is expected to climb higher and take a large portion of overall demand for the metal.

Jewelry demand is forecast to climb 4 percent over 2017 levels. Silver demand from the jewelry sector accounts for approximately 20 percent of overall silver demand.

Silver exchange-traded-products (ETP) are estimated to increase about 3 percent in 2018 after reaching a record high of 670 million ounces in 2017, according to the institute.

Global mine supply slipped 1 percent in 2016, the first annual decline following 14 years of consecutive growth. In 2017 that trend continued with mine output expected to contract by a further 2 percent to 870 million ounces.

“Production disruptions out of South America, along with a decline in capital expenditure among the primary producers in the past five years, is expected to constrain output again this year,” according to the Silver Institute. “However, the strong recovery in base metal prices will provide some support to output in 2018, particularly from by-product producers capitalizing on the trend.”

The spot price of silver average $17.05 per troy ounce in 2017, but is anticipated to experience volatility in 2018.

“On a ratio with gold, currently at around 72, silver has plenty of room for improvement and to migrate towards its long-term average of around 64,” according to organization.

The Silver Institute describes itself as “a nonprofit international association” of “leading silver mining houses, refiners, bullion suppliers, manufacturers of silver products and wholesalers of silver investment products.”

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