It’s no secret that the silver market can be incredibly volatile. From May 2023 to May 2024 alone, the white metal has seen price levels ranging from lows of US$20.90 per ounce to highs of US$32.33 per ounce.
Many investors are highly focused on the precious metal’s movement. After all, silver is a safe-haven asset that generally fares well during turmoil, and recent times have been packed with tense geopolitical events, environmental disasters and economic uncertainty. While it’s trended up over the last 12 months, silver hasn’t been able to properly break the US$30 level until very recently.
Why is silver going up? With the support of looming lower interest rates, lower holding costs for bullion, and increased central bank interest in precious metals, the price of silver is trading at highs not seen in nearly decade. But, can silver go even higher? And when?
Unfortunately, answering the question, “When will silver go up?” is tricky. Even seasoned analysts can’t tell the future, and it’s difficult to find a consensus on the topic of when the metal could take off.
Nevertheless, it’s definitely possible to track down different opinions on the topic. Market participants interested in investing in silver would do well to keep these ideas top of mind as they try to determine where the spot price may move.
How has silver performed year-on-year?
To approach the question, “When will silver go up?” it’s useful to look at its past performance.
As mentioned, silver has had ups and downs over the past year, although it has largely been trending higher. After dropping as low as US$18 in September 2022, the silver price rallied from early November to reach a Q1 high of US$24.39 in January 2023. Although it fell again through early March to just under US$20, the US banking failures that month drove silver and gold upward, with the white metal climbing to US$26.06, its high point for the year, on May 4.
While silver cooled off after that peak, it wasn’t a drastic fall, and the metal was able to test US$25 in July, and again in August. However, in early October, silver slipped as low as US$20.90 before another crisis — the Israel-Hamas war — pushed the price back up above the US$23 level. Silver ended the year at US$23.76.
Silver’s performance from May 27 2023, to May 27, 2024.
Chart via TradingEconomics.com.
Early in 2024, silver fell to a low of US$22.08 per ounce on January 21, and traded mostly flat for much of the remainder of the first quarter before rising to a Q1 high of US$25.62 on March 20. While it seemed like silver would never go up above US$30, the subsequent upward momentum in the second quarter sent prices for the white metal surging by nearly 40 percent to a 12 year high of US$32.33 per ounce on May 20.
What factors affect silver supply and demand?
Now that the silver price has broken above US$30, investors wondering if now is a good time to sell silver or buy the white metal should evaluate its current fundamentals. Global geopolitical events and rate changes from the US Federal Reserve are key factors to watch when it comes to silver.
Growing expectations that the Fed is on the verge of lowering interest rates alongside rising geopolitical uncertainties are responsible for this latest peak in silver prices. Macroeconomic conditions are also on the mend, supporting silver industrial demand.
Silver’s potential to continue its upward trajectory will ultimately depend on the ability of these factors to support prices above the critical US$30 level.
What do we know about silver supply and silver demand? Many market watchers look to the World Silver Survey for information; it is published each year by the Silver Institute using data provided by Metals Focus.
According to the 2024 World Silver Survey, in 2023 the silver market experienced a 1 percent decrease in mine production over 2022, primarily due to lower output from lead and zinc mines that produce silver as a by-product. The four month suspension of operations at Newmont’s (TSX:NGT,NYSE:NEM)Peñasquito in Mexico following strike action, and the closure of Pan American Silver’s (NYSE:PAAS,TSX: AAS) Manantial Espejo mine were also contributing factors.
Metals Focus expects to see silver mine production decrease by 1 percent in 2024 to reach 823.5 million ounces, while overall global silver supply is also projected to decrease by 1 percent to hit 1.003 billion ounces.
On the demand side, 2023 was the third in a row now that silver demand heavily exceeded supply. As a whole, total offtake hit 1.195 billion ounces, down 1 percent year-on-year. After hitting a new high of 337.1 million ounces in 2022, Bar and coin demand fell 28 percent year-on-year to 243.1 million ounces for 2023. Driven partially by growth in photovoltaics (up 64 percent), industrial demand hit a fresh high of 654.4 million ounces last year, up 11 percent year-over-year.
Silver jewelry fabrication and silverware, dropped by 13 percent and 25 percent, respectively, from the previous year. The forecast for 2024 shows jewelry fabrication has the potential to recover by 4 percent, while silverware is projected to jump by 7 percent this year.
On the flip side, holdings in exchange-traded products (ETPs) and commodities trading experienced another year of weakened demand in 2023. ETPs saw large outflows for a second year in a row, with combined holdings falling by 67 percent year-on-year. Following a sharp pullback in 2021 and 2022, 2-23 saw a rebound in trading on commodities exchanges, with the main CME contract’s annual turnover up 6 percent from the previous year.
What is the outlook for silver?
Metals Focus anticipates another strong year for silver demand in 2024, and is calling for a deficit of 215.3 million ounces, driven in part by continued stagnation in supply alongside another record year for industrial demand.
Rich Checkan, president and COO of Asset Strategies International, has a very bullish outlook for silver, which he shared with the Investing News Network (INN) in November 2023. He reminded investors that while gold moves first, silver lags behind and eventually comes along for the ride.
“If you can catch silver at the lower levels before it outpaces gold, the profit potential is amazing,” Checkan said during the conversation. “I still think gold is your answer for wealth insurance. But if you’re looking for profit, I actually skew it toward silver, and now might be a very good time.”
Longtime resource sector investor Don Hansen is also optimistic that signs are pointing to a potential precious metals bull market.
“The interesting thing is that most of gains in these bull markets is in the last two or three years. And I think we are at the beginning of that period, which is why I think there’s so much potential for gold and silver investors,” Hansen told INN in an April 2024 interview where he encouraged investors to consider adding gold and silver mining stocks to their portfolios.
Jeff Clark of TheGoldAdvisor.com agrees with Hansen. “I think the next bull run in this cycle is going to be significant. It’s going to be strong,” he said in a November interview with INN on the sidelines of the New Orleans Investment Conference. “I think this could be a two to three year bull market easily once (gold) makes a new all-time high, once it breaks out. And silver will come, but it will have a delayed reaction. The fuse there is a little longer than the fuse on gold.”
Peter Krauth, editor of Silver Stock Investor and author of “The Great Silver Bull,” agrees with Clark when it comes to silver’s proclivity to follow gold, and said it also often outperforms the yellow metal. In an April 9 email to INN, he pointed to the silver’s performance compared to its yellow cousin during the first quarter of 2024.
“Silver also typically lags gold, then catches up and surpasses it. We’re starting to see that happen in spades right now. Since the end of February, gold is up about 15 percent, while silver is up about 22 percent. Those are breathtaking gains in just a matter of weeks,” he said.
Moving forward, Krauth sees decreasing silver inventories at the COMEX, London Bullion Market Association and the Shanghai Gold Exchange as a major driver of the silver price in 2024. However, silver’s industrial side is another factor to watch this year. Concerns over a looming recession may dampen gains; on the flip side, interest rate cuts may spur economic growth and provide upside for the silver price.
There’s also the question of silver manipulation — experts such as Ed Steer of Gold and Silver Digest and GATA believe the silver price is controlled by entities like JPMorgan (NYSE:JPM) and will not rise significantly until these players allow it to do so. However, these factors don’t mean that the silver price will never again reach its highest price of nearly US$50. If the metal continues to rise this year, reaching higher prices will become more plausible.
In fact, Chris Marcus, founder of Arcadia Economics and author of the book “The Big Silver Short” has described the white metal as “an amplified version of gold.” He told INN, “I look at what happened in 2011; that’s what the book gets into. Either the price came down because they sold a lot of paper that they can’t back up, or maybe there’s another explanation. But if that is correct, to me US$50 seems like a floor whenever a free market comes back.”
For investors, a key point to remember is that the resource space operates cyclically — while a commodity like silver can experience price rises and falls, ultimately what goes up must come down and vice versa. The advice to “buy low and sell high” is repeated often for a reason, and though it’s nigh impossible to predict market bottoms, low points in the cycle can be a good time to flex your purchasing power.
This is an updated version of an article first published by the Investing News Network in 2015.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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