Silver Price Outlook – April 2024

“Silver Price Outlook
Silver prices have been in an uptrend since the middle of February and have followed gold prices higher. That said, silver prices have substantially underperformed gold prices. While gold prices have been making fresh record highs silver prices have still not reached the highs seen in 2021 and at present levels are at significantly lower levels than those seen in 2011 when silver prices reached a record intraday high of $49.82.

On a monthly average basis, the gold:silver ratio averaged 90.2 during March, which is high by historic standards and highlights silver’s relative undervaluation compared to gold. That said, on a daily basis, the ratio between the two metals has been falling in recent days and on 3 April stood at 88.3. The ratio merely enumerates the relative price strength of these two metals. It does not portend rising or falling relative strengths in the two metals’ prices, contrary to many people’s belief.

Silver has a lot of catch-up to do with gold were there any substantive reason to expect that the two metal’s price ratio should be lower than it presently is. For that to happen it would take stronger silver fundamentals relative to those of gold than have been typical of the recent markets for these two metals.

As discussed in previous issues of this report, silver prices often lag gold prices in a bull market for a variety of reasons, with one of the most important being the massive amount of silver that gets backed up in dealer inventories from sales during previous periods of price declines. These inventories act as a drag on silver prices when gold and silver bull markets are in play. Once investors stop being net sellers and the dealer inventories are absorbed by investors silver prices may start rising at a much more rapid pace than gold and price gains then outpace gold, which is a much larger and more liquid market.

While this phenomenon is expected to occur in the next few years, it does not seem probably to CPM to occur this year. That said, if gold prices continue to build on their current momentum a retest of silver ’s highs from 2021 should not be ruled out. It is important to remember that a lot of investors bought silver in 2021 at prices between $28 and $30. Some of that has come back to the market from disenchanted investors, but other investors are holding onto that metal. They may decide to sell it if prices reach these levels again, which could cap prices.

As discussed in the gold section of this report, while CPM Group projects higher gold prices later this year, in the short term (the next three to six months) could see some price consolidation or weakness. Such consolidation or weakness in gold would be expected to act as a headwind for silver as well.

If gold prices were to continue rising in the near future, a retest of $30 for silver is possible.”