Silver Price Outlook – August 2024

“Silver Price Outlook
While silver prices rose during the early part of July, prices were unable to settle above $31.75. Prices softened during the second half of July and early August, slipping as low as $26.59 on 5 August.

Gold prices on the other hand were scaling new record highs during July and early August. This discrepancy can be explained to a large extent by what CPM Group has been stating in these reports for some time now, which is that silver prices will face headwinds in the near term driven primarily by stale bull liquidation by disappointed investors. That is, the selling of silver bought by investors in past years in anticipation of silver prices reaching record high levels as touted by marketeers on the internet and elsewhere. Silver prices are far from the records that were reached in 2011 and even further away from some of the outlandish projections that are put out in the markets of $100 silver or more. Such stale bull liquidation could continue for some time, although there may be signs emerging that it is slowing down. The fact that silver was able to rise as high as $31.75 and stay above $30 for several days in two periods from May through July is one indication that some of these investors may have pulled back from selling, waiting to see if silver prices would rise further.

This phenomenon of investors selling less metal and coming to think that if they wait a few days they may be able to sell at higher prices was critical at the turns in the market in 1978 – 1979 and again in the period from 2001 into 2006. Periods of significant increases in silver prices historically started with investors selling less silver on a net basis, as opposed to becoming net buyers as a group. The net buying extends from the reduced net selling, but it comes later.

Many investors were buyers at levels above $30. Silver prices rose above this level for the first time in May 2024, with the last time prices rising above this level being February 2021. Every time prices get above $30 there could be a wave of investor holdings being liquidated, which is expected to bring prices lower, as has already been seen twice this year, since May. When these investors are done selling, it will allow silver prices to rise in a freer and possibly more consistent fashion.

CPM Group expects silver prices to perform well over the next couple of years. This expectation is based on a deterioration of economic and political conditions going forward, which is expected to drive higher demand for silver as a portfolio hedge, safe haven, diversifier, currency hedge, and inflation hedge.

CPM Group projects a sharp slowing in economic growth during the second half of 2024 and a recession at some point in 2025. More than the recession itself, it is the uncertainty associated with the various political and economic risks that is expected to bode well for silver investment demand. Like gold, silver too is purchased by investors as a portfolio diversifier. While this may not be apparent when looking at the silver price performance at present. Silver has grossly lagged gold, which has been rising from strength to strength. The ongoing expectation of political and economic uncertainty that is expected to continue over the next few years coupled with a completion at some point of the stale bull liquidation in the silver market should help silver prices to rise strongly over the course of 2025 and possibly 2026.”