About price forecasts and predictions
Price predictions help market participants manage price risks, create hedging strategies, and make informed decisions about buying or selling assets in financial markets. That said, price predictions are speculative, particularly when it comes to long-term price forecasts. Therefore, investors should use them as a complementary tool, and not as their primary source of advice to make investment or trading decisions.
What is silver and what affects its price?
Together with gold, silver is one of the most popular precious metals. It has been used for many centuries to create coins and jewellery. It has also established itself as a popular investment for investors trying to protect their assets against inflation.
Silver has a long history, having been used as currency in various civilizations, including the Greeks and Romans, who used it extensively for jewellery and utensils. Silver’s importance grew during the 16th and 17th centuries when the Spanish established colonies in South America and operated silver mines with significant output there.
The precious metal also played a key role in the United States during its emergence as a major economic power. The discovery of the Comstock Lode triggered a major boost in silver mining.
Aside from being a major investment instrument, silver today is still used in a variety of industries – from solar panels, jewellery to electrical conductors and medical equipment.
Silver prices are commonly quoted in troy ounces. The LBMA Silver Price is the global benchmark, with the price set each working day at 12:00 GMT. A variety of market participants are involved in this process — from jewellers, producers, and refiners to investment banks and central banks.
Silver is highly sensitive to the movement of the US dollar and US interest rates. Rising interest rates will boost the US dollar and make silver less attractive to investors, as the precious metal is not generating any yield. Silver tends to be in demand during times of risk aversion and is seen as safe haven.
Silver prices gradually increased in the first three-quarters of the 20th century, with little volatility. In 1980, the precious metal saw a parabolic price increase that was driven by the attempt of the Hunt brothers to influence the market. In 1979, the three brothers started to accumulate significant amounts of silver, which ended with them owning one-third of the world supply not owned by governments.
The price of silver jumped to an all-time high of $50.35 per troy ounce, an increase of more than 700% year-on-year. After prices started to cool down, the Hunt brothers could not meet their margin requirements, which caused panic in the market. A consortium of US banks eventually stepped in to provide the brothers with a line of credit, which also saved several brokerages from bankruptcy.
Silver prices collapsed following the incident, and saw a steady decline in the 1980s, followed by consolidation in the 1990s.
Interest in silver picked up again in the 2000s, with the Great Financial Crisis triggering a rush into safe-haven assets. The precious metal crossed the $20 mark in 2008, for the first time in 28 years. Prices collapsed shortly after but rose rapidly in 2011 as investors were concerned about the eurozone crisis and the massive quantitative easing measures implemented by central banks globally.
Momentum was lost quickly, however, with silver retreating and settling around $15 in 2014, just three years after almost touching the $50 mark again.
Silver regained momentum during the COVID-19 crisis that had investors rushing to safe-haven assets. Since then, it has been consolidating as an increase in interest rates has capped the topside.
Silver price forecasts 2024
Silver´s performance in 2024 is likely to be heavily affected by geopolitical tensions, such as the US presidential election and monetary policy decisions by the Federal Reserve.
Geopolitical tensions
Geopolitical tensions are likely to remain in the spotlight in 2024 as the war between Russia and Ukraine continues and the risk of a wider conflict in the Middle East increases. Geopolitical tensions tend to drive investors into safe-haven assets, including precious metals like gold and silver. New conflicts or escalations of existing ones could lead to an increase in silver prices.
US presidential election
Most investors like stability and predictability. For example, if Trump defeats Biden in the upcoming presidential election, there could be wide economic implications, particularly when it comes to US foreign policy. With the unpredictability of a second Trump term, investors would likely flock to safe havens until the situation becomes clearer, thus benefiting silver.
Monetary policy decisions
High interest rates make silver less appealing to investors, as the precious metal is not generating any yield. Thus, it is more attractive to investors to just hold cash instead. However, if the US central bank starts cutting rates in 2024, silver will become an attractive investment.
A poll of 30 analysts and traders conducted by Reuters showed that they expect precious metals to appreciate in 2024, driven by conflicts in the Middle East and central banks starting to ease their monetary policy.
Silver price forecasts 2025 and beyond
Major banks and leading market analysts generally provide only short to medium-term price predictions. Particularly the commodities market is known to be highly volatile and events such as geopolitical tensions or extreme weather conditions can lead to drastic price swings. This volatility makes it difficult to issue long-term price predictions.
That said, silver is generally seen to increase in value over time by most analysts, as investors will continue to seek protection from rising inflation and geopolitical risks. Many analysts also noted that industrial demand will increase, particularly during times of economic expansion.
Silver price forecasts 2030
The Minerals Council of Australia did not issue a particular price range but expects silver prices to rise towards 2030. They note that demand for silver will grow as highly populated emerging economies are creating new markets for consumer electronics. They also mention that silver is heavily used in solar PV cell production, another growth market.
Conclusion
The majority of analysts predict that the price of silver will rise in the coming years. In the short-term, silver could benefit from a less restrictive monetary policy by the Federal Reserve, ongoing political tensions and uncertainty surrounding the US presidential election. In the medium to long term, many analysts see industrial demand for silver rising rapidly, which could lead to shortages and an increase in price.