Why the silver price is rising and how high could it go?

Before delving into the reasons for the current rise in the price of silver, let's examine the performance of silver in 2023 and 2024.

In 2023, the opening price of silver on January 1st was 23.97 USD, with the highest price reached in 2023 being 26.05 USD. However, by the end of the year, the silver price closed at 23.42 USD. Overall, investors experienced a slight loss in 2023.

Silver started off 2024 at 23.80 USD per ounce and steadily increased after a brief setback to 22.09 USD. In April, silver surged to a new yearly high of 27.49 USD, marking a 5.40 USD increase from the previous low of 22.09 USD in 2024. The current silver price performance in 2024 is 15.50%. But what are the reasons for this strong increase, and can we expect further price hikes?

Silver is a versatile metal that plays a crucial role in various industries. The largest demand for silver comes from the industry, particularly from sectors such as electronics, solar energy, and medicine. In medicine, silver's antimicrobial properties make it attractive, leading to its use in medical devices, wound dressings, and implants.

In electronics, silver is utilized in electronic devices, printed circuit boards, batteries, and solar cells. Particularly, durable solar cells require silver as it does not oxidize, unlike copper.

With increasing technological advancements, the demand for silver continues to rise. Especially for 5G communication, flexible displays, RFID chips, printed circuits, and sensors, silver is needed. Additionally, electric vehicles require a significant amount of silver, with each Tesla needing approximately 2 ounces of silver. The energy transition will thus require large quantities of silver, driving demand to new records.

Currently, there are numerous regional conflicts that are already affecting the global economy and could further escalate on a global scale. The major conflicts include the war in Ukraine and the conflict in the Middle East, which is currently also leading to issues in global supply chains. However, additional conflicts in Europe or Taiwan could become reality in the near future.

In times of geopolitical uncertainty and economic turbulence, investors seek safe havens. Silver is often considered a safe haven, similar to gold. Therefore, further increase in the price of silver is expected.

Central banks are expected to lower interest rates soon. This leads to increasing inflation on one hand and a higher interest in precious metals on the other hand, as they do not pay interest but are considered good investments in times of low interest rates. Investors will increasingly turn to gold and silver as hedge against currency depreciation and inflation.

Additionally, the United States will print large sums of new US dollars, as they alone have to pay 1.6 trillion in interest on their national debt this year. This massive sum is roughly equivalent to half of Germany's entire national debt. Therefore, further devaluation of the USD is expected, which should lead to rising precious metal prices.

The gold-silver ratio is currently at almost 85, meaning that for the same price one could buy one ounce of gold, one could also buy 85 ounces of silver. When this value is very high, it is a clear buying signal for silver, as it is relatively cheap compared to gold. This is because silver is more abundant than gold at a ratio of 15 to 1. With current production, it looks even lower at 8 to 1. However, gold still costs 85 times more than silver, indicating that silver is currently undervalued.

Unlike gold, silver is currently almost exclusively mined as a by-product in mines, not in pure silver mines. Therefore, the production volume of silver cannot be quickly increased if silver demand surges. It is more likely to expect a timeframe of up to 8 years until new silver mines are active. Therefore, silver has the potential for a sharp increase if a critical threshold in demand is exceeded.

Many experts anticipate that the price of silver could be between 25 and 35 US dollars per ounce by the end of 2024 or mid-2025. Some experts even believe that the silver price will soon explode. Robert Kiyosaki, best known to many as the author of "Rich Dad Poor Dad," expects the price of silver to increase to 500 USD within the next 2 years.

 

But even if silver doesn't reach these heights, a steady and significant price increase is expected. The demand in the industry will rise, especially for high-tech applications and renewable energies. Additionally, silver is gaining increasing popularity as an investment. Moreover, silver coins are becoming increasingly popular among collectors, as the lower price of silver allows for a larger collection compared to gold coins.

Furthermore, a new group of internet investors has identified silver as a target for a so-called short squeeze. These investors try to buy as much physical silver as possible to create a scarcity of silver, ultimately leading to an increase in the silver price. Additionally, this is intended to inflict financial damage on large financial institutions suspected of artificially keeping the silver price low and manipulating it. The rally in Gamestop stock serves as a model for this.

Overall, the outlook for the silver price is very promising. We anticipate a significant increase in the silver price and also expect the price to multiply over the next 5 years. It could prove to be a very good decision to invest 5 to 10% of one's own portfolio in silver. Investors willing to take on more risk can choose a higher percentage. Overall, the risk of investing in precious metals is considered relatively low. The further development of the silver price remains exciting; we are very positive, and the silver rally should continue.