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When Will Silver Go Up?
Many investors are asking themselves “When will silver go up?” Are market conditions ripe for another run up in the silver price?
It’s no secret that the silver market can be incredibly volatile. From November 2022 to November 2023 alone, the white metal has seen price levels ranging from highs of US$26.06 per ounce to lows of US$19.99.
Many investors are confused by 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 US$26.
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 last September, 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 so far this 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. As of November 20, silver was hovering around US$23.50.
Silver's performance from November 20, 2022, to November 20, 2023.
Chart via TradingEconomics.com.
What factors affect silver supply and demand?
Global geopolitical events and rate changes from the US Federal Reserve are key factors to watch when it comes to silver.
But what 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 2023 World Silver Survey, in 2022 the silver market experienced a 0.6 percent decrease in mine production over 2021, primarily due to lower output from lead and zinc mines that produce silver as a by-product.
Metals Focus expects to see silver mine production increase by 2 percent in 2023 to reach 842.1 million ounces, while overall global silver supply is seen rising by 2 percent to hit 1.03 billion ounces.
On the demand side, 2022 was a year of record highs for physical silver. As a whole, total offtake hit 1.24 billion ounces, up 18 percent year-on-year. Bar and coin demand hit a new high of 332.9 million ounces, up 22 percent year-on-year. Driven partially by growth in photovoltaics, industrial demand hit a fresh high of 556.5 million ounces.
Two more record highs — at least since 2010, when the World Silver Survey first began — were reached by silver jewelry fabrication and silverware, which jumped an impressive 29 percent and 80 percent, respectively, over 2021. By far, the majority of bar, coin, jewelry and silverware demand was driven by India.
On the flip side, holdings in exchange-traded products (ETPs) and commodities trading experienced weakened demand last year. ETPs saw the largest outflows in over a decade, with combined holdings falling by 11 percent year-on-year. Following a sharp pullback in 2021, 2022 saw further declines in trading on commodities exchanges, with the main CME contract's annual turnover dropping to its lowest level since 2015.
What is the outlook for silver?
Metals Focus anticipates another strong year for silver demand in 2023, and is calling for a deficit of 142.1 million ounces, driven in part by anticipated new all-time highs for industrial fabrication and historically high bar and coin demand.
The firm's final 2023 numbers won't be out until April 2024. However, 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. 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."
Watch the full interview with Checkan above.
Jeff Clark of TheGoldAdvisor.com agrees with Checkan when it comes to silver’s proclivity to follow gold, and said it also often outperforms the yellow metal. "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."
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.
Don’t forget to follow us @INN_Resource for real-time news updates!
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.
Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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MARKETS
COMMODITIES
Commodities | |||
---|---|---|---|
Gold | 2232.75 | +0.84 | |
Silver | 24.95 | +0.03 | |
Copper | 4.01 | +0.01 | |
Oil | 83.11 | +1.76 | |
Heating Oil | 2.62 | +0.01 | |
Natural Gas | 1.75 | +0.03 |
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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