- Silver price forecasts are optimistic as the metal hits a seven-year-high.
- In the short and middle term, $30-$50 estimates exist.
- In the long term, some analysts are predicting triple-digit values.
- This is not unrealistic given the inflation since previous peaks.
What do silver price estimates tell us?
Silver Price at a Seven-Year-High
This week, the silver price broke out, quickly crossing the twenty-dollar level which was the one-year-high. It topped as high as $23.40, a record of about seven years. The gray metal has converted from an underperforming precious metal in an outperforming one in days. Year-to-year, it rose 37 percent, while gold only 31 percent.
Same as gold, silver got help from a huge amount of liquidity-expanding measures by central banks, increasing the money supply. (“Money printing”, we may say so.) And the huge uncertainty that accompanies the coronavirus-crisis. Also, in developed market countries is almost impossible to reach some risk-free interests. While inflation stays in the positive territory. Negative real interest rates have always been friends with precious metals. And there is little to no chance of raising interest rates in developed countries in the coming years.
But, silver is not only a safe haven and investment target. It’s also an industrial metal to a greater extent than gold. Industry demand used, of course, fall during a recession and restart when economic growth also revives. But many other factors affect the silver market. Such as jewelry demand, the weakening dollar. Or the temporary closure of some Latin-American mines for the coronavirus pandemic.
Silver Lags First, Speeds Up Later
If we look at the long-term chart of gold and silver below, we see that gold has performed better in some periods and silver in others. We can often read that in the past, silver usually started moving later than gold. Many times only in the late stages of the precious metal bull market. But then, silver goes much further, outperforms gold.
This happened in 2011-2013, when gold rose about threefold and silver, fivefold. There is no guarantee that this will happen now. But in the big picture, silver appears to be relatively cheap. The high value of the gold/silver ratio is a sign of it. This indicator is by 83 now, while the long-term average was between 50 and 60. (But in March, it reached approximately 125, too.)
How Long Does The Precious Metal Show Last?
After the previous financial crash, also known as the Lehman Brothers crisis, there was a bull market in precious metals for three to four years. A similar process started in May 2019, but we don’t know how long the trend will be. Maybe the economy is recovering and precious metals are quickly forgotten. It could also be a crisis of overproduction, a shortage of demand, and deflation instead of inflation.
Maybe all bullish silver price forecasts will result mistakes. It is also possible that a huge amount of money entering the economy will cause large asset price bubbles. So, exploding stock prices will push your precious metals into the background. Everyone will want to buy stocks or real estate investments. A cryptocurrency rally may also distract from precious metals. Younger generations rarely buy metals, Bitcoin is more popular for many of them. Sometimes, Bitcoin is also referred to as digital gold.
Silver Analysts Are Optimistic
Last week, I collected forecasts for gold, in the first line from institutional investors and investment banks. (See 11 Top Gold Price Forecasts of Smart Money–How High Can It Go?) Now I repeat this for silver. Although the silver market is smaller and fewer analysts are engaged in it. (This can be good or bad. Lower liquidity can cause higher peaks, but also lower lows.)
Analysts and estimations I found seem optimistic in the big part. Some forecasts were made before this week’s big jump, but there are some fresh ones. I’m wondering when higher price targets, new forecasts appear. Long-term silver price forecasts are of particular interest. These are usually much higher than short-term or middle-term estimates.
1. Silver Price Forecast: Triple-Digit!
“Something big is happening in silver.” “Silver could be at the very beginning of a monster move higher”–wrote Austrolib on SeekingAlpha. “I believe silver is at the very beginning of a historic rally that should take it to all-time highs in the triple digits. The rally should be fast and furious, as were the previous two in 1980 and 2011, my guess taking about 2 years or less this time”.
Comment: This seems to be one of the most bullish silver price forecasts so far. The price of silver has risen fivefold in the few years since the Lehman Brothers crash. So no matter how incredible this prediction is, it doesn’t seem unreal either.
2. Silver Price Forecast: Around $50 (ATH), and More
Peter Schiff, a famous “American libertarian, stock broker, financial commentator, and radio personality,”predicted in a podcast this week. “Silver was close to $50 in 2011. That is the next stop. Believe it or not, that’s where the real resistance is and that’s where we’re going.”
But it won’t stop there. Silver was close to $50 on the ATH (All-Time-High) in 1980 and 2011, approximately $49.50. Once silver breaks through $50, Schiff said, it will go “much, much higher.” He also said: “double-tops. I think they’re made to be broken.” (Schiffgold.com)
Comment: The US inflation index rose to 258 points from 83 points approximately in 40 years, from June 1980. So, by 212 percent. That means 49.5 US dollars in June 1980 have a value of $154 today, inflation-adjusted. If history were to repeat itself, I wish it had done so in real terms.
3. Silver Price Forecast: $29-$30
The page Longforecast.com is automatically adjusting its prognosis by “mathematical and statistical methods of prediction based on the existing historical data“. So, the numbers may include the effects of the price rally of this week. For the end of 2020, the forecast is $28.77. In 2021, $30.26, in 2022, $27.63 and in 2023, $28.63. (With a declining price in 2024.)
Comment: Approximately a week ago, we wrote about their gold price forecast. It was $2,072 for December 2020, $2,528 for the end of 2021. Today’s updated gold prices are $2,272 and $2,771, and they even predict 3,111 USD for the end of 2023. As we see the actual price level strongly influences these estimates.
4. Silver Price Forecast: $25, or $14
A pragmatic approach by the Goldsilver.com page. They said earlier, the silver price potential for 2020 is “with crisis”, $25. And in case of no crisis, $20. We know now that the crisis came and hit the world. But there is also a third option: The price in the case of a “potential low if big deflation” was only $14.
Comment: Did we see that low in March? (The bottom was 11.68 USD.) Or may that come back in a prolonged crisis? We see. But I’m sure central banks or governments will make “whatever it takes” to avoid deflation. They are terribly afraid of it. (See also: Are We Facing Epic Inflation, Horrific Real Interest, and Brutal Gold Price Explosion?)
The “potential 5-year high” of silver on this page is $100-$150. And “potential 5-year high” for gold, $3,000 to $8,000. Seems to be very optimistic.
5. Silver Price Forecast: $24-$28
“Bullish bias, spike to $24. In 2021 spike to $28.” (Investinghaven.com)
A fresh prediction. Because earlier they wrote:
This is not a raging bull market, it is in an early stage in 2020 and might start picking up in 2021. Silver’s price has an upside potential of 30% ($22/oz) in 2020, and upside potential of 65% ($28/oz) in 2021.
6. Silver Price Forecast: $23.7
“1 year Silver (ounce) Forecast: 23.686 USD. 5 year Silver (ounce) Forecast: 90.380 USD”–wrote Gov Capital, which operates another automated analysis system.
“A custom algorithm based on Deep Learning that helps our users to decide if Silver could be a good portfolio addition for the future. These predictions take several variables into account such as volume changes, price changes, market cycles”–they explained.
7. Silver Price Forecast: $23-$28
FX Empire targeted $2150 to $2190 gold price in the long term and was also optimistic about silver. They set silver prices to $23 in short term and $28 in the longer term.
Comment: Remarkable, because silver just hit $23. (These are technical target levels.)
8. Silver Price Forecast: $23
“Analysts at Degussa, a European precious metals firm, have also increased their price target for silver, calling for a rally to $23 an ounce by the end of 2020”–wrote Capital.com. Even more interesting is a long-term forecast on this page, although not for 2020-2021.
In his interviews with Palisade Research in 2017 and Kitco in 2018, CEO of First Majestic Silver, Keith Neumeyer, said the white metal has a potential to reach the $130 level. In the past, he gave even more bold predictions, suggesting silver could reach $1,000.
Comment: Is this the obligatory over-optimism of a silver-miner manager, or more? Time will tell.
9. Silver Price Forecast: $18-$19
A fresh, but not very high silver average price forecast from July 16. “The mining and materials equity team at RBC Capital Markets has raised its silver price forecasts by 16% in 2020, 17% in 2021, and 14% in 2022. RBC now forecasts silver prices will average $17.76 per oz. this year, $18.75 per oz. next year, and $18.50 per oz. in 2022.” (Mining.com)
Comment: The average hides large price fluctuations. With such an average, the price level at the end of the year could be as low as ten dollars but also $33 or more.
What Do Silver Price Forecasts Tell Me?
If the general opinion on the market is that the silver price will be $28 by the end of 2021, then it’s time to reach $22-$23 now. Because in this case, investors are already buying it and sending up the price. But not up to $28. Because everyone wants to earn at least 15-20 percent on it. So is how short- and medium-term speculators function.
An old saying came to my mind: 2 x 2 in the markets is not four, but 3+1, or 5–1. The forecasts will like fulfill after huge fluctuations, high volatility. For example, the price of silver will be $50 one day. But before that, it may drop to ten first, then jump to 40, and then drop to 16 again. Turbulence is expected, please fasten your seat belts! (And avoid high leverage.)
Related Readings for You:
11 Top Gold Price Forecasts of Smart Money–How High Can It Go?
- DIY Fake News Generator –Was Gold a Better Investment, or Stocks?
- How to Buy Gold Coins, Bars, Jewels? 4 Ways, Essential Pros and Cons
- Are We Facing Epic Inflation, Horrific Real Interest, and Brutal Gold Price Explosion?
- 11 + 1 Grave Investment Errors Robinhood Newbies May Commit
Disclaimer
I’m not a certified financial advisor nor a certified financial analyst, accountant nor lawyer. The contents on my site and in my posts are for informational and entertainment purposes and reflecting my collection of data, ideas, opinions. Please, make your proper research or consult your advisors before making any investment or financial or legal decisions.
I have open positions in silver (long), platinum (long), junior gold miners (long), crude oil (short), German stocks (short), uranium miners (long), S&P 500 (short) and cryptocurrencies (long) at the time of writing.
(Photos: Pixabay.com.)
