Silver might have made some gains but is has not bridged the double digits. There are a few of economists who believe that silver is poised to hit the three digit mark. Possibly go as high as $130.
Silver has had quite a run in the past, but has not risen past US$20 per ounce level since 2016. Some analysts have put the price at $130 but others have been bold enough to predict the silver bullion going up to $1,000 an ounce.
In order to understand where these analysts are coming from it is important to understand what it is that moves the prices of this precious metal.
There is a long way that silver would have to go to reach $130. For it to even hit that mark it would have to go up eight times its current value. There are investors who see the current economy coming close to that of 2000 when the dot com bubble was about to burst. With quantitative easing being applied, when things become better, the market will self-correct and when that happens, the silver price will rebound. As the Corona virus rages, governments are taking on massive debt to get through the crisis, they are also printing money which is scenario that is advantageous for gold and silver.
The trust that is being put on precious metals like gold and silver will continue to move markets. However, the increasing demand for supply by the solar panel industries and the electric car market are what will drive the silver price higher. Silver can also be seen decoupling from gold because of its growing use in appliances like computers to solar panels as previously mentioned.
The supply from silver mining has gone down but consumption has not receded. The world consumes 1 billion ounces of silver a year but silver miners can only produce 800 million ounces and this supply has been dropping in the last three years.
According to the latest World Silver Survey by the Silver Institute, the silver bullion market demand experienced an increase in 2019 despite the decrease in mine production. Analysts expect the silver mine production to drop by 5% in 2020 to 797 million ounces. This would be the lowest level since 2009.
The future of silver
To get a better understanding of where the precious metal is going in the future, it is important to understand what would push the price further.
The weakening US dollar
The dollar has been weakening this has a positive effect on the silver market.
The US Federal reserve has dropped interest rates significantly
The geopolitical issues and the current pandemic have had an adverse effect on the supply of silver.
The same factors that influence the price of gold will continue to affect the price of silver. So when gold rises, so does the price of silver.
The realistic amount that silver analysts seem to agree on is $19 by the end of 2020. However, there could be more pronounced moves if the economy and geopolitical issues continues to get worse. The highest that silver has been was in the 1970s when it reached $50. It almost reached that level in 2011 when it reached $35.12. The rise in the price on both counts was brought about by a strong demand for silver. For now, whilst the future looks promising, we can only wait and see.