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Silver Prices Forecast: Will Supply Shortages Propel Prices Higher?

By:
James Hyerczyk
Published: Mar 31, 2024, 05:13 GMT+00:00

Key Points:

  • Silver's steady performance contrasts with gold's record highs.
  • Supply-demand imbalance underscores bullish sentiment in silver market.
  • Silver's undervaluation suggests potential breakout above $26 per ounce.
Silver Prices Forecast

In this article:

Silver’s Performance Overview

Silver wrapped up the week with marginal gains while showcasing substantial monthly and quarterly performances. Despite its impressive gains, silver trails behind gold, equities, and cryptocurrencies. This divergence shouldn’t concern bulls as long as the upward trend persists. Silver serves as a hedge for investors in gold, stocks, and Bitcoin, indicating its significance in uncertain market conditions.

Last week, XAG/USD settled at $24.97, up $0.29 or +1.18%.

Weekly Silver (XAG/USD)

Silver’s Potential Upsurge

Gold has historically outperformed silver, but indications suggest a potential reversal in favor of silver. Forecasts predict a fourth consecutive annual deficit in global supplies coupled with rising demand, setting the stage for a possible rally in silver prices. The upward trend could see silver prices doubling by the end of 2024, bolstered by growing interest as gold prices soar.

Gold vs. Silver Comparison

While gold prices surge to record highs, silver lags due to its industrial utility and less prominent safe-haven status compared to gold. However, silver’s broader industrial applications and the projected supply deficit hint at a possible shift in its favor. Despite gold’s dominance since 2016, the trend might reverse as silver’s industrial demand gains momentum.

Supply-Demand Imbalance

Forecasts indicate a sustained supply shortage in silver, intensifying pressures on physical inventories. Global silver demand is expected to climb to its second-highest level on record, while supply struggles to keep pace. Growing demand from solar photovoltaics further strains the already tight supply, signaling potential price hikes.

Market Forecast: Bullish Outlook for Silver

Based on futures prices and supply-demand dynamics, silver futures may outpace gold this year, potentially reaching a 10-year high around $30 per ounce. The anticipated deficit in silver supply underscores the bullish sentiment, with forecasts suggesting a breakout above $26 in the near term. The gold-to-silver ratio suggests undervaluation, paving the way for a bullish surge in silver prices.

In conclusion, while gold commands headlines, silver emerges as a compelling investment opportunity with strong fundamentals and favorable market conditions. Investors should closely monitor silver’s performance as it charts a promising path in the coming quarters.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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