Silver Price Forecasts & Predictions

Gold has been hot this year, and for good reason: the Coronavirus pandemic, unprecedented bailout programs announced by the Federal Reserve and Treasury Department, and now riots developing around the United States have all contributed to the rise in bullion. For the year, gold is up $213 or 14% to close at $1,737 per ounce as this article is going to press.

What about the “other” precious metal – gold’s cousin – silver?

For the year, silver is down $0.27 cents or 1.5% to $17.65.

A disappointing performance for silver, no doubt.

Is the pain soon to end for silver investors? Will this be the time that silver finally follows gold and heads higher? Or is more languishing ahead?

In this article, we look at the silver market from a technical standpoint – with an emphasis on what ultimately matters most to the majority of investors: the silver price.

Ways to Analyze The Silver Market

One might analyze the silver market in a dozen ways.

For example, a thorough evaluation of supply and demand will show that over the past decade, approximately 80% of silver demand has come from industrial fabrication, namely from electronics, solar panels, and jewelry.

Meanwhile, on average only 20% of the silver extracted from the Earth each year is sold to investors.

One might spend years studying trends in the solar industry, or investor appetite for silver versus competing asset classes, all in an attempt to identify turning points for silver itself.

One might also focus on attempts by certain multinational banks to interfere with the proper functioning of the silver market. Manipulation attempts are not conspiracy theories, they are conspiracy facts, as discussed in this article from CNBC.

Still, an evaluation of silver by any one of these means alone in insufficient. How much of the silver market is manipulated? How...

The 2020’s are shaping up to be a great period for silver.

Before diving into why, it’s worth reminding about a key difference between gold and silver.

Gold is mostly a monetary metal, with the vast majority of its usage going to bullion and jewelry rather than industry. Silver is roughly half monetary metal and half commodity metal, with its consumption about equally split between its industrial usage and its bullion/jewelry usage. That makes silver demand more pro-cyclical, meaning it can have softer demand from industrial consumption during recessions. Silver is also primarily a mining byproduct of other metals, so most of its production isn’t tied directly to supply/demand of silver itself. Therefore, silver tends to have very wild volatility.

However, this also makes it a more reflationary metal, meaning one that tends to do well on the recovery side of a recession when fiscal and monetary stimulus are pouring out into the economy.

Gold to Silver Ratio

If we look at the gold-to-silver ratio over the past three decades, it has increased during all four recessions in the period:

Gold to Silver Ratio

Chart Source: Macrotrends

During the early 1990’s recession, the early 2000’s recession, and the 2008 recession, the gold-to-silver ratio went up. The same happened during this early 2020 pandemic shutdown, although this hasn’t been officially marked as a recession yet, so it doesn’t have the shaded gray area yet. Nonetheless, it clearly is a recession, which makes it the fourth one in the sample period for the purposes of this article. 

After each recession, or during the later stages of it, silver starts to outperform gold, so the ratio decreases.

Although both gold and silver often briefly sell off during the initial liquidity-driven phase of a bear market, gold tends to hold up better and recover first, due to its safe-haven status. Silver, due to its hybrid monetary/industrial status, doesn’t get the same safety trade that gold gets.

However, on the recovery side of the recession, when the economy is in rough shape but...