We look at the factors affecting the silver market and where should investors expect the market to move next, including some of the latest silver forecasts & price predictions from analysts.
Silver posted a disappointing performance this year as it moved from a high of just over $26 in April and May to a low of $20 in early Q4.
Silver prices and precious metals in general have been weighed by elevated real yields amid the growing view that interest rates will remain higher for longer given stubbornly high inflation. Rising nominal interest rates coupled with easing price pressures/inflation expectations have pushed up real rates, raising the opportunity cost of holding the zero-yielding yellow metal.
Is the worst over for precious metals? Probably not, according to the latest Silver forecasts and price predictions.
Potential safe-haven bids and short-covering on escalating tensions in the Middle East have boosted silver in October. Dovish comments by US Federal Reserve officials suggesting that the US central bank has pivoted on rates is also supporting the precious metal. While heightened geopolitical uncertainty could keep precious metals well bid, unless the broader trajectory of US Treasury yields/real yields reverse, the path of least resistance for silver remains sideways to down.
Silver Forecast & Price Prediction – Summary
- Silver price forecast Q4 2023: If geopolitics won't slow or reverse the slide in the precious metals, silver is forecasted to trade within the descending channels and fall as low as $19 in Q4 2023.
- Silver price prediction 2024: The prospect of supply shortage and renewed interest from investors could send the price above up to $30 by the end of 2024.
- Silver price prediction for the next 5 years and beyond: While some rating agencies forecast Silver price to reach $70 by 2030, the World Bank expects the metal to trade between $20 and $25.
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Silver Forecast - Fundamental Outlook 2023
Silver’s outlook in the coming few months depends heavily upon two factors:
Investors are keeping an eye on the rate and pace of the US Federal Reserve and other central banks’ interest rate hikes in the coming months, due to how they are likely to affect precious metals and other commodities.
The progress of the Middle East and Russian conflicts is also a key factor for metal prices, as currently, silver is also seeing some safe-haven demand, as the crisis rages on. This is also likely to continue due to expectations of slowing global economic growth this year, as well as a mild recession.
It is important to understand that Silver serves two primary functions. It’s a precious metal with a monetary role and industrial metal with numerous and growing applications. It’s also in jewelry and silverware and other objects, of course, but predicting the price comes mostly from these two functions…
Because of silver’s chemical composition, it is one of the best electrical and thermal conductors of all metals. It also has growing use in the medical field, due to its antibacterial properties.
In fact, silver has so many industrial uses that the Silver Institute calls it “the indispensable metal.”
Industrial demand for silver is going up.
One big reason is that many “green” technologies require silver. Electric vehicles use almost twice as much silver as internal combustion engines, while solar panels contain silver, and their installation is growing. 5G/mobile phone technology uses silver. And it’s clear that “greening” the infrastructure is a government priority.
Industrial demand was a whopping 539 million ounces in 2022.
“Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies, and government commitments to green infrastructure will have industrial demand overcome macroeconomic headwinds and weaker consumer electronics demand”, the Silver Institute said.
They also point out that “silver jewelry and silverware are set to surge by 29% and 72% respectively to 235 Moz and 73 Moz this year, mainly thanks to an unprecedented rebound in Indian demand.”
This growth in industrial demand supports the silver price going forward.
Investment demand for silver fluctuates each year, sometimes wildly. And that’s why it has the biggest impact on the silver price.
In 2022, investment in physical silver grew 18%, to 329 million ounces, a new record. So, if investment demand grew that much, why wasn’t the price higher than just 3.7%?
Because ETFs holdings saw their largest annual decline last year. And ETFs are where funds and institutions—who have deep pockets—typically invest, according to analysts.
Commodity strategists at TD Securities warned that the silver market needs to see a significant change in investor demand and renewed industrial interest if it is going to escape the gravity around $23 an ounce in the near term.
They forecast the silver market is set to be looser than the projected 110koz annual deficit this year due to concerns surrounding higher-for-longer interest rates, a lack of speculative appetite, less physical demand amid Chinese economic weakness, and a pending U.S. recession. As a result, silver is forecasted to trend around a low of $23 per ounce for the majority of the upcoming three months (August, September, and October).
However, TD Securities sees solid potential for silver by year-end as the Federal Reserve starts to cut rates as recession conditions begin to bite. They forecast silver will set its sights towards $26/oz in the final days of 2023. Despite the near-term challenges, the firm forecast silver's long-term potential remains bullish. They added that there isn't enough mine supply for silver to meet the long-term demand trends.
Silver Price Forecast - Technical Outlook December 2023: Key ceiling is at $25.50-$26.00
The rally in the past year or so has been substantial, but two developments suggest the rally is no more than corrective (correction of the 2021-2022 slide). Firstly, silver remains well under stiff resistance on a declining trendline since 2020, reinforcing the downtrend. Secondly, the failure, at least so far, to clear the March 2022 peak of 27.00 - the inability to create a higher high reaffirms the lower-high-lower-low structure since 2021 and supports the bearish silver price predictions for Q4 2023 and the beginning of 2024.
XAG/USD’s rebound has run into stiff resistance on an uptrend line from late 2022, slightly above the support-turned-resistance at the August low of 22.20. Above this, there is a major converged hurdle on the 200-day moving average, the late-September high of 23.75, and the upper edge of the Ichimoku cloud on the daily charts. XAG/USD needs to cross the 23.25-23.75 area for the immediate downward pressure to fade.
From a slightly broader perspective, as highlighted in the Q4 outlook, XAG/USD needs to cross above 25.50-26.25 resistance for the outlook to turn constructive.
The most likely silver forecast is a downward development within the bearish channel towards the lower band around the $18-19 area by the end of Q4 2023 – Q1 2024.
Silver Forecast and Price Predictions
Citigroup forecast silver could hit $30 per ounce highs over the second half of 2023 to the second half of half of 2024, with imminent support seen from buyers eyeing value in the metal after its sharpest price slide in a month (May) since February,
They predict silver would rally in anticipation of the fall in U.S. interest rates and real yields that will likely accompany an anticipated rollover in U.S. growth in Q4’23 or early 2024. This should weigh on the dollar, with economists expecting U.S. rates and the dollar to weaken further (DXY to 96).
Economists expect China to continue to gradually recover and any associated rebound in Emerging Markets growth sentiment could be an incremental tailwind for silver. They forecast silver demand in China demand could recover in 2H 23 following further easing measures by the People Bank of China.
India is considered another promising market, which may continue destocking amid higher prices in 2023.
The World Bank expects the price of silver to be stable at $21 per ounce in 2023 and 2024, essentially the same value it projected a year earlier. Bank of America was more bullish, expecting the precious metal to rise to US$23 in 2023.
While analysts are typically cautious in issuing long-term forecasts for commodities, algorithm-based forecasting services regularly provide price outlooks for more extended periods.
According to Trading Economics' global macro models and analysts' expectations, “silver is forecasted to trade at $23.90 per troy ounce by the end of this quarter”. The website forecast silver to trade at $25.50 in 12 months’ time, or by October 2024.
Gov Capital, another algorithm-based forecasting service, issued a silver price prediction stating that the metal would close out 2023 at a potential average of $24.489. The platform sees silver rising to an average of $36.581 by the end of December 2024, $53.840 by the end of 2025, and $76.561 by December 2026.
Wallet Investor’s silver price forecast for 2023 was bullish. The website saw the precious metal closing in 2023 at the $23.20 mark. The platform’s silver price forecast for 20254 saw silver trading within the 23.00-25.00 range, while its silver price forecast for the next 5 years has the commodity breaching the $27 price point..
In his book, “The Great Silver Bull,” Peter Krauth derived a valuation of $300 silver through technical analysis. Krauth has a model that forecasts that gold’s price will rise to $5,000 by 2030, which would drag silver’s price up to $300. This is due to gold’s use as an inflation hedge.
“My thesis is that if you look at what’s happening with inflation, and if you look at how other assets are hurting,” he said.
Here are some other 2023 Silver forecasts we have gathered from numerous analysts both inside and outside of the silver industry.
“We think recent price weakness offers a strong dip-buying opportunity, reiterating our call for $30/oz silver over the next 6-12 months as U.S. growth rolls over, even if emerging markets growth stagnates.”
“Silver tends to outperform 3:1 in bull markets. Once silver eclipses $30-50, the next move could soar to $70-$100.”
“A recession could put a damper on industrial demand but not enough to make silver a recessionary casualty. It is going to do well next year, just like gold.”
“Industrial demand for silver was at a record in 2022, reaching 539 million ounces. With so many countries focused on energy security, silver saw new demand come from solar panel installations, which hit new highs this year. The automotive sector also contributed to additional demand, particularly the electrification of vehicles. The average silver content per vehicle is increasing.
“Silver should benefit from the end of the Fed's interest rate hikes and the speculation on interest rate cuts that will start thereafter. The expected economic recovery following the end of the recession should additionally benefit silver as a precious metal with a high industrial use. With the easing of corona restrictions in China, silver demand should receive a further boost, as China is the largest consumer of silver.”
“Silver will move higher in 2023 because we expect the top in the U.S. Dollar to be confirmed. Moreover, our 2023 silver price forecast is supported by leading indicators like inflation expectations and the silver CoT report (silver futures market positions). Once silver trades near $36 it will be a matter of time until it attacks ATHs. We also tip silver as the precious metal to buy for 2023.”
Bank of America
"While upside may be limited near-term, mine supply is constrained, so a rebound of commercial purchases is set to ultimately push prices higher. [Supply] should also be supported by rising demand from solar panel and electric vehicle manufacturers, as the global community focuses on tackling climate change.”
“Long-term, I'm looking for silver to hit $50, but that might take a few years. Prices could easily double in 2023 and the first half of 2024.”
“Commodities have been in a supercycle since 2020, with silver looking to play a special role, especially considering how cheap it is relative to other commodities. When you are in a supercycle, you often find high-beta plays do better. Between 1999-2011, silver did much better than gold.”
You can see that while many are moderate to strongly bullish, there is some disparity among the silver price predictions for 2023.
When considering silver price predictions, it’s important to remember that high market volatility makes it difficult to give long-term estimates. As such, analysts and algorithm-based platforms can and do get their predictions wrong.
Always do your own research before making an investment decision. And never trade or invest more than you can afford to lose.
Ways to Forecast the Price of Silver
Lots of things can impact the silver price—the economy, the US dollar, and inflation expectations, among others—but historically these are the most influential drivers to look at when forecasting the price of silver.
While demand for all of silver’s u12s01es fluctuates each year, they don’t change dramatically. Greater industrial demand will support the market, but any big spike in the silver price has historically come from one source, where demand fluctuates the most: investors!
ETF holdings, where most funds invest in silver, are expected to grow in 2023, according to multiple analysts. With physical demand still elevated, the silver market could see higher total demand from investors this year.
Based on anticipated investment demand, analysts expect higher silver prices in 2023.
The gold/silver ratio is simply the price of gold divided by the price of silver. Since both are considered monetary metals, they usually move together—which can give us clues when the ratio gets stretched in one direction or the other.
The higher the ratio the more undervalued silver tends to be relative to gold; the lower the ratio the more overvalued silver is to gold.
And when readings get stretched, they tend to correct themselves, as this chart shows… notice the ratio roughly corresponds to the highs and lows in precious metals cycles.
As 2023 began, the ratio was about 76. While not at an extreme, it’s still 24% above its 55-year average. Goehring & Rozencwajg Associates forecast gold prices to increase in the long term and lead-silver but expect silver to surpass it, and the ratio to hit 20, the near-low gold-silver ratio of 1980.
GoldSilver.com also expects to see the gold/silver ratio drop below 20. “The day that people rush back to gold and silver as monetary assets is the day you’ll see the ratio revert back to its 1980 low of 14, giving you enormous leverage to gold.”
The gold/silver ratio suggests the silver price is likely to rise in 2023 according to market watchers.
Inflation expectations are positively correlated to precious metals. They are a very strong leading indicator, certainly when combined with the EUR/USD effect.
The long-term setup in TIPS (Treasury Inflation-Protected Securities) seems to be hitting a multi-decade low in the context of its rising channel. Can TIPS move lower? While everything is possible, the recent decline was equally large as the previous ones in 2008 and 2020. That’s why analysts believe TIPS is about to start a consolidation and move higher in 2023.
Source: Google Finance
Correlated with the USA 500 chart shown below, makes the point: a turning point in all three markets is not far away. All three should resolve higher in 2023 according to experts, even if they decide to continue their downtrend in the first half of the year.
Precious metals need a rising Euro (falling or flat USD) in order to shine. EUR/USD should continue moving higher in 2023, according to market strategists, and support the precious metals.
Source: CAPEX WebTrader
The major investment banks' price projections are pointing towards 1.15 for the end of 2023, once the pair will break the 1.09 inflection point.
Futures market (CoT)
This is another leading indicator for silver. The way to think of this leading indicator for silver is a stretch indicator:
When net positions in the futures market of commercials and non-commercials are stretched it indicates that the price is going to take a turn.
This is not a timing indicator, we need the silver price chart to determine the timing of a turning point.
Right now, as per the data on the center pane (blue and red bars), we see that commercials and non-commercials have extremely low net positions, historically low. This is a setup that supports rising silver prices.
What we want to see in 2023 is the red and blue bars rising not so fast as the price of silver is moving towards 28 USD, the secular breakout point.
Ted Butler, an expert in reading the CoT report in silver said: The silver CoT report remains unusually bullish, especially given the surge in price from 18 to 24. While a pullback is very likely, the more important thing is that the CoT as a stretch indicator does not indicate that the silver price rally is stretched, on the contrary.
Silver Price History
The silver markets have climbed from the $12 per ounce lows reached at the start of the Covid-19 pandemic, as investors have bought physical precious metals and financial instruments as safe-haven assets during ongoing economic uncertainty.
The silver price reached a $28 high in August 2020 and ended the year around the $22 mark.
The price then jumped to an eight-year high in February 2021, briefly touching the $30 per ounce psychological level, as the market attracted the attention of retail investors.
In addition to investor sentiment, the silver price trend has found support from its growing use in industrial settings, which account for roughly half the metal’s annual demand.
Physical silver demand climbed to a record high in 2021, led by an all-time high in industrial applications – silver is the best conductor of electricity, so is often used in high-end applications.
The silver spot price had fallen from $24 to $23 per ounce since the start of the year, as central banks combatted inflation by rapidly raising interest rates. Higher interest rates tend to be bearish for precious metals, as investors opt for interest-bearing savings accounts and other assets that generate guaranteed returns.
Silver traded up from $22.30 per ounce in late January to $26.90 per ounce in early March, a peak so far this year, as the market responded to the Russian invasion of Ukraine. But while the market traded between $24 to $26 until mid-April, it began to sell off sharply later in the month as the dollar strengthened.
The price bounced back to $21.867 in the following two days but then went on the decline, closely following the trajectory of the gold price.
The metal attempted to rebound in late July, trading above the $20 mark for several weeks, before shedding close to $2 from its value in 10 days on the back of further interest rate hike expectations – in the current climate, the Fed’s pledge to curb inflation is leading investors to favour the dollar instead of non-interest-bearing bullion assets.
November saw the Fed make its fourth consecutive 75bps rate hike, taking its short-term borrowing rate to a target range of 3.75%-4% – the highest level since January 2008 – as it continues its mission to return the US economy to 2% inflation.
The precious metal saw an outstanding few weeks towards the end of 2022, with a weekly gain of about 4.7% and a monthly gain of about 14.4%. This has largely been due to speculation about China loosening its current zero-Covid policy, even though official statements have denied this so far.
The continuous futures contract for silver ended last year at $23.97 per ounce, up 3.7%.
History of Silver
Evidence of the first silver mines dates to 3000 B.C. in Anatolia, a site in modern-day Turkey. Most of the silver mining in that part of the world shifted east to Greece by 1200 B.C., as that civilization expanded. In 100 A.D., Spanish silver mines fed the Roman Empire's economy.
Silver's popularity increased in the years 1000 to 1500, thanks to improved technology, more mines, and better production techniques. The quest for silver and other precious metals gave rise to Spanish fleets that sailed all over the world, seeking wealth and new lands to conquer. It was a vital part of the mercantile system.
Silver production in the United States peaked in the 1870s with the Comstock Lode in Nevada, and by the end of the 19th century, humans produced more than 120 million troy ounces every year. One of the most iconic ways humans used silver was as a form of currency.
In the early 1960s, supplies of silver in the United States dwindled to all-time lows. Therefore, the U.S. government decided to stop using silver in its coins after 1964. Any American dimes, quarters, half dollars, or dollar coins with a date of 1964 or earlier contain 90% silver. If the price of silver is $20 per ounce, these silver coins are worth approximately 14 times their face value in the precious metal content alone. A silver dime is worth $1.40, whereas a silver dollar is worth $14 at a $20-per-ounce price.
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