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.
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.
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.
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.
“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.
“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.
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.
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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