According to analysts, the cost of silver could reach a 9-year peak of $30 per ounce this year, potentially surpassing the price of gold. The last time silver reached this level was in February 2013, as reported by Refinitiv.
The reason for this projected increase is due to a shortage in silver supplies and its tendency to perform better than gold during high inflation periods. In the past, silver has shown gains of nearly 20% each year during high inflation.
With silver still being relatively cheap compared to gold, it wouldn’t be surprising if it reaches $30 per ounce this year, although this may pose some resistance. Historically, silver reached its highest ever spot price of $49.45 in 1980 during a time of 13.5% inflation. Currently, silver is trading at $24.02 per ounce with an inflation rate of 6.5%.
silver prices could reach a 9-year high in 2023, outpacing the price of gold. Several factors are contributing to the potential rise in silver prices, including increased demand for silver in various industrial applications, as well as a growing interest in precious metals as a hedge against inflation.
Factors driving demand for silver
The factors driving demand for silver is its use in various high-tech applications, such as electronics and solar panels. The growth of these industries is expected to drive demand for silver higher in the coming years, leading to a potential rise in silver prices. The Silver Institute reported that the supply of silver produced from mines in 2022 was 843.2 million ounces, falling short of the decade’s highest amount of 900 million ounces in 2016.
In addition to its industrial uses, silver could also benefit from growing interest in precious metals as a hedge against inflation. With central banks around the world continuing to inject liquidity into their economies, many investors are concerned about the potential for higher inflation in the future. As a result, they are turning to precious metals as a safe haven asset.
Smallwood stated that the supply of silver, which is mainly obtained as a byproduct from copper, lead-zinc, and gold mines, does not react promptly to changes in demand. The silver mines can’t simply boost production when silver prices rise because they only account for 25% of the silver supply.
The market mainly depends on lead-zinc mines to meet the higher demand. Although, reaching $30 per ounce for silver wouldn’t be unexpected, Smallwood does not believe that the price will be sustained and predicts it will remain above $20 per ounce.
Also the silver has historically lagged behind gold in terms of price, but this trend could change in 2023. With demand for silver expected to increase, along with a growing interest in precious metals as a hedge against inflation, silver prices could outperform gold in the coming year.so, silver prices could hit a 9-year high in 2023, outpacing the price of gold.
