Precious Metals
One of the frustrating things for owners of precious metals in recent years has been a perceived lack of strong price growth. All the conditions seem to be in place for an enormous spike in precious metals prices, with inflation remaining problematic and recession on the horizon, yet the real jump in precious metals prices never seems to materialize.
That’s particularly true for silver owners, who have watched silver demand increase and silver supply decrease, while prices still seem to underpeform. So when will silver make its big breakout? Well, it may already be underway.
When people think of precious metals, they naturally think of gold first. Silver always seems to be an also-ran.
So while gold saw great growth since 2020, and more recently has been setting new all-time highs from late 2023 until today, silver has been trailing.
Yes, silver has finally started to make its run too, with a 25% gain so far this year. That’s nothing to sneeze at, and it’s a higher growth rate than gold, but it still feels underwhelming.
Many people think silver should be at least double the price it is right now, and even then they think it might be undervalued. But that could be in the cards in the next few years if everything aligns just right for a major silver price breakthrough.
Silver is already in short supply above ground, with decreasing amounts of the metal being mined each year. Even though recycling has picked up, overall silver supply has been falling since 2015.
Increased demand from industry, like that for the production of solar cells, continues to draw down silver stores. And with increased demand, the conditions are right for massive gains in the silver price in the coming months and years.
Keeping up with trends in the precious metals market and attempting to predict the future price of silver can help individuals determine what percentage of their retirement portfolio they want to allot to silver. As part of a balanced and diversified portfolio, silver can play a strong role in protecting your wealth in the face of economic headwinds.
Whether you decide on a silver IRA rollover or just want to get started with a roll of silver coins, owning silver can help safeguard your wealth through turbulent times.
One of the problems that many people have when looking at the silver price, and financial assets in general, is focusing on short-term price movements.
The price of silver throughout the day can be influenced by any number of factors: large silver depositories leasing silver, institutions reallocating assets ahead of quarterly filings, or even just pieces of positive or negative news regarding industry or politics.
But if you’re going to buy and hold silver for the long term, it’s far more important to think about what silver will be worth in 10 years rather than what the silver price will be in 10 days.
If you want to accurately make a future silver price prediction, you have to screen out most of the news and commentary that you’ll read regarding silver.
From overly enthusiastic silver bulls who think silver will eventually be worth $1,000 an ounce, to bears who think silver will eventually be worth less than lead, financial media is full of people with their own take on silver.
Screen out the noise and focus on the big picture issues that will drive silver prices. But that doesn’t mean that the silver price will necessarily respond to headline economic data like the inflation rate or the jobs report.
Since silver production is very often a byproduct of mining for gold, copper, lead, and other metals, and because silver demand is split about 50/50 between industrial use and other forms of demand, you may want to make a future silver price prediction by looking at moves in the prices of other metals.
Silver’s price is most analogous to that of gold, particularly when economic performance turns for the worse during recessions. Silver prices and gold prices often move in tandem.
During a weak economy, the prices of base metals, such as copper and nickel, often deteriorate due to falling demand from industry. In contrast, the prices of silver and gold rise as individuals snap them up to strengthen their portfolios.
Gold and silver prices, therefore, often fluctuate in tandem, although silver tends to experience more volatility in price, particularly on the upside. It’s rare to see gold increase and silver drop, or vice versa. And the long-term trends for both metals generally tend to mirror each other.
Gold gets all the attention in the mainstream financial press, which is understandable. But when you start to read about gold picking up steam and seeing price increases, there’s a very good chance that silver is making similar moves. And very often those moves in the silver price are larger percentagewise than those in gold.
The Commitment of Traders (COT) report is data published by the US Commodity Futures Trading Commission (CFTC). It consists of data describing the positions held by large traders in commodities such as gold and silver.
Analyzing the COT reports each week shows which way professional traders are moving in the markets and what their expectations of the long-term silver market forecast are.
The more long positions taken, the higher traders predict the future silver price will be. The more short positions taken, the lower they predict the future silver price will be.
It’s important to look not so much at the total positions, but the change in positions from week to week and the developing trends over the long term. The more traders moving from short to long positions, the better the outlook is for the silver price.
But even if you see movement from long to short positions, that doesn’t necessarily mean that the outlook for the silver price is negative. It could just be an indicator that some are looking to take advantage of short-term pullbacks in the silver price to take a profit, while the long-term silver price trend remains positive.
Silver supply has outstripped silver demand for the last five years, and is predicted to outstrip demand once again this year. Eventually this long-term imbalance should be reflected in the form of higher silver prices.
Mining supply from silver has dropped over the past 10 years, while silver demand has increased. If this trend continues, and if prices rise as a result, it could be very good news for owners of silver.
Silver is the key component in the production of solar panels. Without silver, solar panels can’t convert sunlight into electricity.
As demand for green energy increases, solar energy is becoming an increasingly important part of supplying that demand. And that means that demand for silver from the solar industry is rising significantly as well.
Stay attuned to trends in green energy demand to predict how silver prices might move. As long as demand for green energy continues to increase, demand for silver should continue to increase, which could keep silver prices elevated.
Given how much silver has grown in price this year, and how much further it could go if the economy falls into recession, it shouldn’t be any surprise that the future for silver looks to be quite bullish.
A lot is still riding on the result of the Presidential election, but even a Trump win (that would be seen as good for the economy) can’t overcome the deep-seated structural issues that still beset the economy.
Continued economic weakness will likely result in more demand for silver, as individuals look to safeguard their assets and protect their savings. And a full-fledged recession a la 2008 could see silver shoot far higher.
A lot is also riding on the Federal Reserve’s actions with regard to interest rates. Cuts to the federal funds rate, which are expected possibly later this year, are widely seen as being bullish for gold and silver.
You’ll also want to keep your eyes on the gold to silver price ratio. Over the past few decades it has fluctuated between about 40:1 and 120:1.
Currently it’s around 80:1, which is historically fairly high. A reversion to more normal historical ratios would easily push silver up above $60 an ounce or more.
So if you see the gold to silver price ratio starting to fall, it could be an indicator that silver is making a strong bull run. And very often during these precious metals bull runs, silver can make bigger gains (percentagewise) than gold.
If you think that silver has tremendous potential for price appreciation and could be a good choice for you, the next step is deciding on how to buy silver. The options can seem limitless and daunting, especially to someone who has no experience with purchasing precious metals.
Thankfully there are trusted partners you can work with to help navigate the options available to you. Goldco has helped thousands of customers benefit from purchasing precious metals, and the more than 6,000 5-star reviews we’ve received are a testament to the lengths we go to ensure our customers have a smooth, trouble-free experience.
Whether you want to buy a handful of silver coins and bars or roll over existing retirement assets into a silver IRA, the experts at Goldco can answer your questions about the various silver purchase options available to you.
If a silver IRA is the direction you choose, Goldco offers numerous IRA-eligible silver coin and silver bar options, working directly with mints around the world to source 100% authentic silver coins for your silver IRA.
Looking to the rest of this year and into the next, the silver market forecast seems incredibly bright. The stage has been set for a surge in the silver price as rising silver demand, diminished supply, and the prospect of rate cuts and recession are providing the perfect set of factors for a nice bull market.
Don’t get left behind as silver once again makes its move. Talk to the experts at Goldco today to see how you can make silver an important part of your financial planning.
This article was originally published in October 2020 and was updated in July 2024.
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DISCLAIMER: This site is general in nature and not tailored to the specific goals of any individual. Purchasing precious metals may carry risk. Some of those risks associated with precious metals include the following: prices may rise and fall, which means the value of your metals may go up or down over time and you may sell for more or less than you paid. Past performance does not guarantee future results. Goldco cannot guarantee, assure, or promise future market movement, prices, or profits. Customers should understand that all purchases have some degree of risk. Customers should make certain that they understand the correlation between risk and return. Commodities involve risk and are not suitable for all investors. There is no assurance that commodities, i.e. precious metals, will achieve their objectives. Return and principal value will fluctuate and your portfolio, when redeemed, may be worth more or less than the original cost. Even though Goldco and its representatives are precious metals specialists, we are not licensed financial advisors and do not give financial advice. Additionally, Goldco cannot provide tax or legal advice and will not advise as to the tax or legal consequences of purchasing or selling precious metals or opening a Precious Metals IRA. Individuals should consult with their investment, legal or tax professionals for such services.
