What Could Be on The Horizon For Silver Prices?
Silver price predictions for years ahead: more precious than ever before?
A few factors to consider when choosing to invest in silver this year
To predict future silver prices, having a crystal ball may not be enough. For that, we suggest keeping an eye on a few factors that drive the metal’s fluctuations. The spread of the coronavirus has significantly increased the likelihood of a global recession happening this year, with fears over the second wave of infections adding fuel to the fire. However, it is expected that the reopening of economies after Covid-19 lockdowns will boost industrial demand for physical silver in the coming months.
Moreover, the recent World Silver Survey conducted by Metals Focus for the Silver Institute, showed that the metal’s physical investment, such as silver bars and bullion coins, could enjoy another year of stellar growth: “Silver physical investment is forecast to extend its gains this year, with a projected 16 per cent rise to a five year high as investors rotate out of equities in search of safe haven vehicles. The report also indicated that the metal’s mine production is expected to fall 5 per cent to 797 million ounces in 2020. The surplus of supply in the market is predicted to plunge by 53 per cent from 31.3m ounces in 2019 to 14.7m ounces in 2020. This, in turn, backed by the recovering demand, could provide much-needed support to silver prices going forward. Monetary policy is another driver for the market. In June, the US Federal Reserve said that it sees interest rates remaining at 0-0.25 per cent until 2022. By weighing heavily on the US dollar, this environment supports gold and silver prices.
Additionally, when speaking about silver price predictions, the rollout of 5G telecom networks should also be considered. If this is to happen as planned, the metal will find its use in semiconductors for network equipment, automotive electronics and consumer electronics, driving its demand higher. As noted in the report on Silver’s Role in a Future 5G Connected World published by the Silver Institute, 5G enables a whole new range of silver applications.
Silver price predictions for years to come: from analysts to online forecasting websites
Ongoing economic and geopolitical turbulence has seen many investors taking a step towards a rather reliable asset – precious metals. But does it help the silver prices forecast to look bright? First of all, it is quite difficult for analysts to make certain silver predictions during the coronavirus pandemic. Philip Newman, a founding partner of Metals Focus, explained: “To say it’s cast in tremendous uncertainty is an understatement. We realised that with the figures we put together, we had to make a judgment call. We didn’t want to be sensationalist in our views. But we fully recognise that this is probably one of the most uncertain forecasts we have ever put out there.” Metals Focus’ silver price projection aims the metal to go above $20 per ounce later this year: “Once gold eventually breaks out to challenge its all-time high, silver should reassert its ability to outperform gold, with the white metal expected to surpass the $20 mark in late 2020.”
“We believe investment inflows into silver are likely to continue. Key to this will be exceptionally low policy rates and unprecedented liquidity injections by central banks, which will ensure a minimal opportunity cost of carrying gold and silver. A slowing global economy should also ultimately encourage a further rotation from stocks and bonds into defensive assets,” analysts added. A popular forecasting website, the Economy Forecast Agency, supports this bullish outlook, suggesting the price of silver will inch higher to end 2020 at $22.30 per ounce. However, looking far ahead, it expects the metal to fall below the $20 mark again in 2024.
So, what is the verdict on silver?
Just like with any other financial instrument, opening a position in silver gives no guarantee of success. Based on the mixed analyst opinions, it may not be the best idea to throw all of your cash in this precious metal right now. However, silver might still be a good long-term addition to one’s well-diversified portfolio.