Silver Price Outlook – February 2024

“Silver prices have managed to stay above $22 but also have struggled to settle above $23.25. Gold’s strong performance has helped to hold silver prices up so far this year. That said, with CPM Group’s expectation that gold prices will soften in the near future, silver prices also look vulnerable to the downside. While silver prices have some support at the $22 level a break below this support could take prices down toward $21 over the next few months.

Silver prices are expected to put in a somewhat lackluster performance during the first three quarters of this year, moving mostly sideways to lower. While prices are not expected to decline sharply during this period, supported by healthy fabrication demand as well as political concerns, the readjustment in market expectations regarding the pace and rate of monetary policy loosening this year is expected to act as a serious headwind to prices.

The gold:silver ratio continued to tick higher during January, highlighting silver’s underperformance relative to gold. In January, this ratio averaged 88.9, which was the highest that it has been since February 2023.

Solar Panels
The growth in silver fabrication demand during 2023 was almost entirely driven by strength in demand from the solar panel industry. Demand from this source, which has rapidly grown to become the third largest use of this metal behind more established uses like jewelry and electronics, stood at a record 192.1 million ounces in 2023.

The increase in demand from the solar panel industry can largely be attributed to a sharp increase in solar panel production during 2023. Governments around the world are working toward meeting their emissions targets and one of the most economical ways for them to accomplish this is via solar power. While climate change is the primary factor helping to drive demand for green energy sources like solar, the Russia-Ukraine war added another reason to intensify efforts to diversify energy sources away from fossil fuels, especially in countries that are net importers of these fuels.

A significant increase in panel production offset any loss in demand due to thrifting, i.e. the reduction of silver use per panel or per unit of electricity output capacity.

Given the significant push globally to move toward more green sources of energy and that solar power is the cheapest source of renewable energy the growth in demand from this sector is expected to continue in coming years, providing ongoing support to silver fabrication demand.
Silver demand from this source is forecast to reach another record high in 2024. Silver demand from this source is forecast to reach 198.6 million ounces during the year, nearly double what it was in 2021 when it stood at 100 million ounces.”