Jeff Clark, Senior Analyst, GoldSilver.com
Where is the silver price headed in 2023? And where is it headed over the next 5 years?
I’ve compiled silver price predictions from numerous analysts, both inside and outside the precious metals industry (you can see the current silver price here). I’ll share those with you, then look at the three primary factors to predict its price, and finally my predictions for 2023 and the next five years.
This will be fun, so let’s jump in!
Silver averaged $21.71 in 2022 and finished the year at $23.98.
Here are the 2023 forecasts I gathered from numerous analysts both inside and outside of the silver industry.
There are some interesting comments that accompany these forecasts.
You can see that while many are moderately to strongly bullish, there is some disparity among the predictions.
So how does one go about making a reasonable prediction about the silver price?
To answer that question, we first must understand that silver is…
Silver serves two primary functions. It’s a precious metal with a monetary role, and an industrial metal with numerous and growing applications. It’s also in jewelry and silverware and other objects, of course, but predicting the price comes mostly from these two functions…
Because of silver’s chemical composition, it is one of the best electrical and thermal conductors of all the metals. It also has growing use in the medical field, due to its antibacterial properties.
In fact, silver has so many industrial uses that the Silver Institute calls it “the indispensable metal.”
One big reason is that many “green” technologies require silver. Electric vehicles use almost twice as much silver as internal combustion engines… solar panels contain silver, and their installation is growing… 5G/mobile phone technology uses silver. And it’s clear that “greening” the infrastructure is a government priority.
Industrial demand was a whopping 539 million ounces in 2022. As the Silver Institute says, “Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies, and government commitments to green infrastructure will have industrial demand overcome macroeconomic headwinds and weaker consumer electronics demand.”
They also point out that “silver jewelry and silverware are set to surge by 29% and 72% respectively to 235 Moz and 73 Moz this year, mainly thanks to an unprecedented rebound in Indian demand.”
This growth in industrial demand supports the silver price going forward.
Investment demand for silver fluctuates each year, sometimes wildly. And that’s why it has the biggest impact on the silver price.
In 2022, investment in physical silver grew 18%, to 329 million ounces, a new record.
So, if investment demand grew that much, why wasn’t the price higher than just 3.7%?
Because ETFs holdings saw their largest annual decline last year. And ETFs are where funds and institutions—who have deep pockets—typically invest.
Now that we understand this base about silver, let’s look at the…
Lots of things can impact the silver price—the economy, US dollar, inflation expectations, among others—but historically these three have the biggest influence…
#1: Investment Demand
While demand for all of silver’s uses fluctuates each year, they don’t change dramatically. Greater industrial demand will support the market, but any big spike in the silver price has historically come from one source, where demand fluctuates the most.
Investors. In fact, you could say…
ETF holdings, where most funds invest in silver, are expected to grow in 2023, according to multiple analysts. With physical demand still elevated, the silver market could see higher total demand from investors this year.
Based on anticipated investment demand…
#2. Gold/Silver Ratio
The gold/silver ratio is simply the price of gold divided by the price of silver. Since both are considered monetary metals, they usually move together—which can give us clues when the ratio gets stretched in one direction or the other.
The higher the ratio the more undervalued silver tends to be relative to gold; the lower the ratio the more overvalued silver is to gold.
And when readings get stretched, they tend to correct themselves, as this chart shows… notice the ratio roughly corresponds to the highs and lows in precious metals cycles.
As 2023 began, the ratio was about 76. While not at an extreme, it’s still 24% above its 55-year average.
I like how Leigh Goehring of Goehring & Rozencwajg Associates views the future for the silver price. “Silver will rise substantially due to monetary reasons. The U.S. dollar won’t survive in its current form. There’s no free lunch here. The debt is not sustainable and can never be repaid. And with higher rates the U.S. government won’t be able to pay the growing interest on that debt without printing money. Gold’s going to the $10,000 range; they’ll destroy the dollar. Gold will lead silver, but silver will surpass it, and the ratio will hit 20 again,” referring to the near-low the gold-silver ratio hit in 1980. This implies a long-term silver price of $500.
Mike Maloney, founder of GoldSilver.com, also expects to see the gold/silver ratio drop below 20. “The day that people rush back to gold and silver as monetary assets is the day you’ll see the ratio revert back to its 1980 low of 14, giving you enormous leverage to gold.”
#3. Silver TRAILS Gold
One frustration of silver investors is that the price can, at times, be dormant, even when gold is trending higher. But this is actually historically normal.
This chart shows that silver usually trails gold in bull markets. But then it catches up and outruns gold.
You see the silver price usually surpasses the gold price in bull runs.
Since most analysts expect gold to be higher in 2023, we can reasonably expect silver to outperform it. If not this year, then 2024. Either way it suggests that silver prices are more likely to rise in 2023 than fall.
Many analysts have pointed out another fact about this tendency. In bull markets 90% of the move higher happens in the last 10% of time. This highlights both its nature to initially trail gold and also catch up and pass it.
Based on the three factors to predict the silver price, here are my predictions for 2023 and the next five years.
The odds favor a higher silver price this year. And over the next few years.
If this prediction plays out as expected, then accumulating silver now would be wise.
About Jeff Clark
An accomplished analyst, author, and speaker, Jeff Clark is a globally recognized authority on precious metals. The son of an award-winning gold panner, with family-owned mining claims in California, Arizona, and Nevada, Jeff has deep roots in the industry. An active investor, with a love of writing, Jeff eventually became a mining industry analyst, including 10 years as senior editor for the world-renowned publication BIG GOLD. Jeff is also a regular conference speaker, including at Cambridge House, MoneyShow, New Orleans, Silver Symposium, Wealthion.com, and many others. Today, he provides free mining stock analysis at TheGoldAdvisor.com.