Where are silver prices heading?

Silver has endured a volatile 2023, trading above $26 per troy ounce in May after sinking to $20 an ounce at the start of March.

Now, attention turns to where the price of silver may go in 2024 in-line with the World Bank silver price forecast. With that in mind, this article looks at the future of silver prices in the coming 12 months and asks the critical question: Will silver prices go up?

Silver Prices Forecast

Silver price predictions for 2023, which foresaw the metal trading in a narrow range in the low twenties, were roughly accurate. Over the past year, the silver price chart in December 2023 also shows us that the price of silver is fractionally above where it began the year. 

Will 2024 predictions on silver prices be as accurate as the silver price outlook of 2023?

First, let’s look at what the analysts are saying. There are a range of predictions on where the price may go in 2024.

A survey of traders in July of the year by Reuters suggested a price of $25 an ounce in 2024. If the Fed cuts rates, the price may exceed $25.

InvestingHaven speculates that $28 an ounce will be a secular breakout level in 2024. The price could quickly move to the $32-$36 range if it gets there. However, they believe this depends on local tops in 10-year yield prices.

Peter Krouth at Silver Stock Investor told Investing Network News that 2024 was a “tremendous opportunity.” He cited the shortfall of 142.1m ounces of silver in 2023. Supply problems are unlikely to disappear because of issues in two top silver mining countries, Mexico and Peru.

Wealth Daily states a “silver price forecast of $30 is perfectly reasonable.” They believe that the economic recovery plus growth in the solar panel market will sway the price more than geopolitical risks. 

They also believe that growth in the wind energy market will further exacerbate supply and demand issues. 

The London Bullion Market Volumes were down a significant 5% yearly for the first nine months of 2023. This further demonstrates the short-term problems in obtaining physical silver.

In conclusion, silver prices will go up in 2024, according to most forecasters. 

There is no total unanimity in this assessment, though. The World Bank’s silver price forecast is that the metal will stay around $21 per ounce throughout the year.

As ever with markets, predicting the future is nigh on impossible. For example, who could have planned for a pandemic or the outbreak of war in Europe? 

Yet, as 2023 draws to a close, there are more reasons for silver’s gain in 2024 than for its fall. There are no predictions that silver prices will hit record highs. However, generally, the expectations for silver are promising.

Many share the same optimism for gold prices, too, and this will influence many investment decisions in the coming 12 months.

Investors should remember the impact that gold prices have on silver prices. That’s according to Alex Boast, a finance and web3 expert:

Gold and silver typically rise together, with silver likely to experience higher percentage gains due to its lower price. Much like silver’s shared history as a tradeable, tangible asset, there’s a comfort associated with investing in hard commodities that have historically appreciated in value over the long term.

Silver Prices History

The history of silver prices goes back centuries. It was the currency of choice for global trade for an extended period before gold displaced it. Fiat currencies then eventually displaced gold itself.

Silver has always traded at a significant discount to its peer, gold. The all-time high price for silver was $49.48 an ounce, achieved in 1980. Compare that to gold, whose record price surpassed $2,110.90 in December 2023.

The silver market is much smaller than the gold market, influencing both metals’ prices. This smaller size makes it more prone to volatile price swings. 

This volatility hit the headlines in early 2021 with the infamous “Silver Squeeze”. In late January, a wave of retail investors purchased silver en masse, sparked by chats on the Reddit forum. 

This sudden investment demand forced institutions to exit short positions against the metal. This caused the metal’s price to climb higher still. On February 1, 2021, silver breached $30 an ounce before the momentum ran out, and the price quickly dropped back a few dollars.

Silver’s rally to challenge its all-time high in 2011 also didn’t last, with the price plunging below $35 an ounce in weeks. 

2023 has been a mildly volatile year for silver, with the price suffering a multi-month slump from its May high when the price was $26 an ounce. This fell to just below $21 an ounce in early October, although it had recorded its deepest lows in March 2023. 

Silver has rallied well since October and is enjoying a solid finish to 2022, setting up the possibility of another rally in 2023.

Factors That Affect The Price of Silver

Having outlined the historical volatility of silver’s price, let us now examine the factors that drive those movements. 

In 2022, the US Federal Reserve hiked up rates multiple times. Many analysts had already priced this in, hence why their silver forecasts were generally accurate.

Holding a physical asset like silver when interest rates rise is less attractive. It doesn’t pay a yield like interest-paying assets such as bonds – that income makes them more attractive.

That’s not the case anymore, however. Kineses has created a silver currency backed by physical silver, Kinesis silver (KAG), which generates a monthly yield for holders on the platform. You can also spend silver via the Kinesis Virtual Card, with instant conversion to fiat at millions of locations worldwide.

Safe Haven Investment

Silver is also considered, like gold, as a haven asset. Investors often seek silver as a safe place to store their capital at times of increased risk on equity markets. 

As with commodities, investors view silver as a hedge against inflation. It has this status because of its finite supply, meaning it holds its value over time.

Industrial use of Silver

As well as macroeconomic factors, silver is also driven by the fundamental elements of supply and demand. 

A wide range of industries use silver. It’s mainly in demand in the electronic sector thanks to its high conductivity and durability. As a precious metal, it also attracts demand from the jewellery industry, albeit in much lower volumes than gold.

It is this industrial appeal that has lent silver a bullish fundamental outlook. Both the energy transition and tech revolutions in progress require silver in abundance. It’s a key component in the 5G mobile technology roll-out worldwide.

Worldwide Silver Shortage

According to the Silver Institute, as reported by Mining.com, there was a shortage of 237.7 million ounces in 2022. The Institute stated this was “possibly the most significant deficit on record.” 

They also predicted that the industry needed an extra 16 million ounces of silver by 2025 and as much as 23 million ounces by 2030. This is likely to put upward pressure on the silver price.

Demand for Silver From Investors

No serious price of silver forecast could fail investment demand in silver either.

As mentioned earlier in the article, trading on silver on the London Bullion Exchange is down.

Speaking on the Live from the Vault podcast, Andrew Maguire suggested that if a shortage led to a “silver price reset, ” this may cause a problem for COMEX. If investors demand physical silver, there may need to be more for delivery. This could pressure those with silver still waiting for delivery to sell it. They may have to change their silver holdings into registered silver. If this happens, the price of silver could soar. 

Regarding the valuation of silver, the upcoming months might be a pivotal moment for the metal. If there is a readjustment in price, this could mean that the price reflects its actual value rather than one governed by paper market bets.

Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. 

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

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