Silver to relay gold? Expected to hit $40 next year!

On Wednesday in the U.S. market, spot silver continued its rally from yesterday, with an intraday increase of over 2.00%.

Since the beginning of this year, the price of silver has risen by over 30%, with particularly strong gains in the past few months.

Michael DiRienzo, President and CEO of the Silver Institute, stated in an interview: "The silver market is currently performing well due to the sustained strong industrial demand for silver, especially in clean energy, electrical, and electronic applications. Furthermore, there is a severe shortage of silver supply."

Another reason for the rise in gold and silver prices is the recent rate cut by the Federal Reserve, making hard assets like precious metals more attractive to investors.

Currently, the price of silver is around $32, compared to around $20 in the same period last year. DiRienzo explained: "Although the price of silver has risen, most analysts believe this does not represent a critical threshold for the solar industry."

The average price of silver in 2023 is projected to be $23.35 per ounce, higher than $21.73 per ounce in 2022.

The U.S. investment firm Bank of America expects the average price of silver in 2024 to reach $28.14 per ounce, and to reach $35.38 per ounce next year.

Silver is used in solar panels to conduct charge from the battery to the system. While each battery produced only requires a few milligrams of silver, this quickly adds up. Recent studies have shown that by 2050, or even earlier, the rapid development of the solar industry will deplete most of the world's known silver reserves.

According to data from the Silver Institute, following the current growth trajectory of the solar photovoltaic market, approximately 332 million ounces of silver will be needed to support 1.33 terawatts of new installations annually by 2050.

After Iran launched a ballistic missile attack on Israel last night, the market is closely watching for potential retaliatory actions from Israel, sparking safe-haven demand and boosting the prices of silver and other precious metals.

However, Joni Teves, precious metals strategist at UBS, stated that while the escalating conflict between Iran and its proxies and Israel may cause a short-term surge in gold prices, the continued rise in gold and silver prices is more related to macroeconomic factors than geopolitics.

She explained: "We believe that in an environment of rising gold prices and Fed policy easing, silver is likely to outperform gold. Furthermore, from a fundamental perspective, we believe the silver market will continue to be undersupplied, providing some support to silver prices."

Teves stated that UBS's year-end target price for silver is $36 per ounce, expected to rise to $40 per ounce by 2025.