According to analysts, silver prices are likely to reach their highest level in 9 years at $30 an ounce during the current year, and their gains may exceed gold prices
The weighting of silver over gold comes, although the yellow metal achieved an amazing start in early 2023, at a time when the dollar relapsed, recording its lowest level in 7 months.
Analysts said in a report published by CNBC that the insufficient supply of silver in addition to its tendency to be a better performer than gold in periods of high inflation are the main factors that support the expectations.
The last time spot silver touched $30 an ounce was in February 2013, according to closing price data from Refinitiv.
Historic gains
Silver has achieved historic gains of close to 20% annually in years of high inflation.
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Given this record, and how cheap silver remains compared to gold, Janie Simpson, CEO at ABC Bullion, said it wouldn't be surprising to see silver heading towards $30 an ounce this year, although that would likely provide significant resistance.
Spot silver prices hit a record high of $49.45 in 1980 on the back of an inflation rate of 13.5%, up from about $4 in 1976, when inflation was cooler at 5.7%.
The precious metal was last traded at $24.02 an ounce, on the back of an inflation rate of 6.5%.
Silver shortage may push it higher
Nikki Shiels, Head of Metals
Strategy at MKS PAMP, said: "Silver is in short supply... There is a marked reduction in available physical stocks located in the New York and London centers, more so than in gold."
Sheils added that silver is expected to record a deficit of more than 100 million ounces over the next five years, with increasing industrial demand despite the scarcity of… supply.
“The bulk of the demand for silver is industrial, [which equals] nearly 50% of the total demand,” she explained, calling for silver prices to rise to $28, with a bullish case of $30 or more.
She was also optimistic about gold, but stated that she is more optimistic about silver.
Demand will increase in the coming years
for his part, Randy Smallwood, president of Wheaton Precious Metals, said that demand for silver is expected to grow by more than 15% over the next five years, based on accelerating industrial demand from automotive and electronics applications.
Silver is commonly used in automobiles, solar panels, jewelry, and electronics.
