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Silver prices could hit 9-year highs in 2023, outstripping gold


A one kilogram silver bar, a two hundred and fifty gram silver bar and a five hundred gram silver bar, all produced by Swiss manufacturer Argor Heraeus SA in Budapest, Hungary, on 20 July 2016 .

Akos mill | Bloomberg | beautiful pictures

Silver prices could hit a nine-year high of $30 an ounce this year – possibly higher than gold.

The last time spot silver touched $30 an ounce was on February 2013according to closing price data from Refinitiv.

Analysts told CNBC that an inadequate supply of silver as well as a tendency to outperform gold in times of high inflation are key drivers supporting the outlook.

“Silver has historically delivered gains of nearly 20% annually during high inflation years. Given that track record and how cheap silver is relative to gold, it wouldn’t be surprising to see silver heading towards $30 an ounce. this year, though, said Janie Simpson, CEO of ABC Bullion.

Spot silver prices hit a record high of $49.45 in 1980 amid 13.5% inflation rateup from about $4 in 1976, when the inflation rate was lower at 5.7%.

The precious metal was last traded at $24.02 an ounce, amid an inflation rate of 6.5%.

lack of silver

Nicky Shiels, head of metals strategy at precious metals company MKS Pamp, said: “Silver is scarce… and the physical reserves available in New York and the physical hubs of London are falling dramatically. tell, more than gold.”

Shiels added that silver is expected to run a deficit of more than 100 million ounces over the next five years, with industrial demand driving a tight supply.

“The largest segment of silver demand is industrial, [which equates] close to 50% of total demand,” he said, calling for the underlying silver price case to rise to $28, with a bullish case of $30 or more.

I’m bullish on gold, but I’m even more bullish on silver.

Randy Smallwood

President of Wheaton Precious Metals

That demand is expected to grow by more than 15% over the next five years, he said, based on accelerated industrial demand from automotive and electronics applications.

Silver is a commonly used material in the manufacture of cars, solar panels, jewelry and electronics.

No silver lining for silver supplies

Randy Smallwood, president of Wheaton Precious Metals, said: “We hit our peak silver supply around five or six years ago. Silver production around the world is really falling and we’re not seeing a lot of silver coming in. produced from mines”.

By trade group silver institutesilver supply from mine production in 2022 is 843.2 million ounces, still low from a decade high of 900 million ounces in 2016.

The supply of silver, which is largely produced as a by-product of lead-zinc, copper, and gold mines, often does not respond quickly to demand.

Freshly minted 30 kg silver ingots are cooled in their molds at JSC Krastsvetmet non-ferrous metal plant in Krasnoyarsk, Russia, on Monday, July 12, 2021.

Andrey Rudakov | Bloomberg | beautiful pictures

“When the price of silver goes up, it doesn’t mean that silver mines can increase production, because silver mines only provide about 25 percent of silver,” Smallwood said. request.

However, he asserted that while it wouldn’t be surprising to see silver hit $30 an ounce, he doesn’t think that price level will hold. He called for prices “to be comfortably above $20 an ounce.”

“I am bullish on gold, but I am even more bullish on silver,” Smallwood said.

‘Against the wind for silver’?

However, fears of a recession could lead to weaker industrial demand, which could send silver prices as low as $18 an ounce, according to MKS Pamp.

The biggest risk to silver prices is if inflation falls faster than expected, Pallion’s Simpson advocates.

“If the Fed continues to tighten policy and if inflation falls faster than the market expects, it will be a headwind for silver, especially if the economy slips into a recession, driven by demand,” she said. The demand for silver is bound by large proportions. to industrial output”.

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