Silver Has Broken $30 Barrier, What’s Next?

Silver Has Broken $30 Barrier
Published on: Jun 6, 2024

David Morgan of The Morgan Report indicated that if an asset’s price stays above a new threshold for three consecutive trading days and trading volume increases above average levels, the probability of the asset continuing its upward trend could reach 80% to 85%. By this standard, silver breakout has arrived, and the market outlook remains bullish.

The silver market has been highly volatile. From May 2023 to May 2024, silver prices fluctuated between $20.90 and $32.33 per ounce, but only recently truly broke through the $30 mark. On May 20, silver prices climbed to a 12-year high of $32.33 per ounce.

Data shows that spot silver prices have risen approximately 36.6% year-to-date, outpacing spot gold’s increase of around 17.4%. Given this upward momentum, some institutions boldly claim that “silver prices are poised to enter a new bull market,” marking the “best era” for silver. In contrast, Morgan holds a cautiously optimistic view for the rest of 2024, predicting that silver prices will likely hover around $35, with it being unlikely to reach the $40 range by year-end.

The price increases in gold and silver are closely linked to interest rate cut expectations and rising central bank interest, while geopolitical turmoil has exacerbated market risk-aversion sentiment.

Compared to gold, silver also has industrial attributes. The recovery of the macroeconomic environment supports industrial demand for silver. Meanwhile, the green economy and emerging industries are driving the incremental demand for silver, particularly in the photovoltaic industry, accounting for 29.6% of industrial demand. Additionally, demand for silver from the electric vehicle and artificial intelligence computing sectors continues to rise.

On the supply side, the 2024 World Silver Survey released by the Silver Institute shows that 2023 saw a 1% decline in silver mine production compared to 2022. Metals Focus projects a 1% decrease in silver mine production in 2024 to 823.5 million ounces, with total global silver supply expected to fall by 1% to 1.003 billion ounces.

In 2023, silver demand exceeded supply for the third consecutive year, with industrial demand growing by 11% year-over-year to a record high of 654.4 million ounces and a 64% increase in photovoltaic demand. Against this backdrop, Metals Focus expects the silver market to see a supply deficit of 215.3 million ounces in 2024.

As early as last November, Rich Checkan, President and COO of Asset Strategies International, was very optimistic about silver, stating that the trends of gold and silver are usually sequential, with silver lagging but eventually catching up and outperforming. For safety, gold is the choice, but for higher returns, silver is better.

The performance of silver this year has validated this viewpoint. Since late February, gold prices have risen about 15%, while silver has surged approximately 22%, with these remarkable gains happening within a few weeks. Looking ahead, declining silver inventories at the New York Mercantile Exchange, the London Bullion Market Association, and the Shanghai Gold Exchange will serve as significant drivers for silver prices.

Gold Interest Rate Precious Metals Silver