Precious metals, including silver, gold and platinum, have been go-to assets for centuries. In different shapes and forms, they are continuously attracting investors from all around the world looking to diversify their investments of regular stocks and bonds.
Do you also want to add some silver shine to your portfolio, but not sure how this commodity is set to perform in the next few years? Wondering how high will silver go by 2020 and beyond? Then this article is for you.
Here, we cover the basics of silver investing, review its recent performance and take a look at what the long-term silver price forecast looks like.
The basics: what you need to know about the silver price trends
Price of silver tends to move similarly to that of gold, especially when economic performance turns for the worse. During times of political turbulence and economic uncertainty, the prices of base metals, such as zinc and copper, drop due to the contracting industrial demand. On the other hand, the prices of silver and gold skyrocket, as investors usually cling to them to hedge the risks and strengthen their investment portfolios.
Both silver and gold prices often fluctuate in tandem: it is rather rare to see gold falling and silver rising, or vice versa, at the same time. Commonly, the long-term trends for both precious metals tend to mirror each other, although silver value experiences volatility more frequently, particularly on the upside.
Generally, gold gets more attention in the mainstream financial press and is often recommended by many investment advisors. However, when you read about gold picking up steam and growing in value, there’s a very good chance that silver is making similar moves. And if history is any example, those moves in silver price are often larger percentage-wise than those in gold.
Silver price analysis from 1970 to 2019: through hardship to the stars and back
To better navigate in the silver price trend, it is important to know how this commodity has performed in the past. Here is what its historical price chart from 1970 to 2019 looks like:
Throughout its history as a traded commodity, silver has seen many ups and downs, reflecting a variety of economic and political events. On January 18, 1980, this precious metal was at its premium, hitting $49.45 per ounce, the highest silver price to date. It then quickly reversed the bullish trend and lost most of its value, falling to $3.55 an ounce in February 1991.
Things became better after the financial crisis of 2008, when many have chosen to invest in both gold and silver, making these commodities one of the most popular markets of the past decade. This, in turn, helped silver to surge one more time, hitting the mark of $48.70 in April 2011. Shortly, its price entered another downtrend, experiencing unprecedented volatility and continuous change in investors’ sentiment.
During the last year, the grey metal had lost much of its shine. While 2018 was expected to be a great year for precious metals, instead, it ended up being a down year for many assets across the board, from bonds and stocks to silver and gold. The silver market faced a challenging environment, weighing on its price dynamics. The highest silver had gone was just under $17.60 an ounce.
Silver was hit hard, dropping 9% over the course of the year. On November 14, 2018, its price fell below the mark of $14 per ounce for the first time in almost three years.
Its performance during this summer has investors all excited about the future of this white metal, reflected in an 80% increase in bullish positions among futures investors. Is this rise in price only a foreshadowing of what is yet to come? Well, many silver-focused investors believe that a bull market for silver is possible, and that its prices could rise even higher by the end of this year.
According to the chart, silver has gained upside momentum.
Trade Silver Spot CFD
If history is any example, does it mean we are about to see some major value gains in silver in the future?
What factors to watch when predicting future silver prices 2020 and further
Before diving into the silver price forecast 2020, it is important to understand what actually drives the price of this commodity.
Emerging economic and geopolitical turbulence, including the ongoing U.S.-China trade war, the Brexit saga, rising tensions in the Middle East and fears of a slowing global economy, has triggered many investors to take a step towards a rather reliable asset – commodities, driving silver prices up.
With the decreasing amount of silver being mined annually, the metal is already in short supply above ground. Besides, increased industrial demand for silver is rapidly depleting the existing reserves. Adding the rising demand from international investors, the conditions are rather perfect to see gains in the silver price in the coming months and years. Therefore, even if a slowing global economy was to decrease industrial demand for silver, the high interest from investors would likely make up for that.
In regards to supply, in the last year, the top three silver producers were Mexico, China and Peru. According to the latest World Silver Survey, published by the Silver Institute and Thomson Reuters’ GFMS team, the silver market saw a 3% decrease in supply in 2018 amid reduced mined and scrap output, leading to a physical market deficit of 29.2 million ounces.
When trying to understand silver outlook 2020, it may also be helpful to look at gold price drivers. As we have mentioned before, even though silver is the more volatile of the two precious metals, it often trades in relative tandem with gold.
The strength of the U.S. dollar and developments in interest rate policies from the US Federal Reserve also affect the prices of these precious metals. For example, at the end of 2018, silver lost almost 14% amid a strong U.S. dollar and a negative impact from the Fed raising interest rates four times throughout the year.
Presently, as the U.S. currency continues to fluctuate in value, silver has made some steady inclines, gaining and maintaining a trading price that is over $18 per ounce.
Therefore, if you want to make accurate silver price predictions 2020 and beyond, you have to stay up to date by browsing the latest news regularly. It is also important to filter out the commentary you may hear about silver, from overly confident and optimistic silver bulls to sceptical bears who believe the metal will eventually cost less than lead. Make sure to focus on the valid data and base your decisions on real facts.
Below, we gathered some analysts’ predictions to answer the question: how much will silver be worth in 2020?
Silver price forecast 2020 and beyond: is it set to skyrocket or fall?
When thinking about how high will silver go by 2020, the experts’ opinions have split in two.
In his interviews with Palisade Research in 2017 and Kitco in 2018, CEO of First Majestic Silver, Keith Neumeyer, said the white metal has a potential to reach the $130 level. In the past, he gave even more bold predictions, suggesting silver could reach $1,000.
Although many analysts and investors do believe that the price of silver is set to rally, none of them expects a three-digit increase. For example, on September 11, 2019, Bank Of Montreal revised its forecast for both gold and silver through 2022. Bank’s precious metals analyst, Colin Hamilton, said the firm is bullish on precious metals as central banks are “falling over each other to ease,” monetary policy. He added: “In our view, this should provide support for gold and silver to trade for a sustained period above our long-run equilibrium expectations.
In its updated forecast, the bank suggests silver prices “breaching $20 an ounce to average the fourth quarter around $19.90 an ounce”. For 2020, their silver price expectations are $18.60 an ounce, which is almost 21% higher from their previous forecast.
RBC bank also increased its silver price forecast for the second semester of 2019 to $17.33 per ounce, compared to the previous $15.75. Regarding its longer-term predictions, silver is expected to trade at $17.50 per ounce in 2020.
Johann Wiebe, a lead analyst at Thomson Reuters’ GFMS division, said he expects silver prices to set around $16.75 in 2019 and $17.50 in 2020 due to rising political and economic uncertainty, which supports the precious metals market.
Analysts at Degussa, a European precious metals firm, have also increased their price target for silver, calling for a rally to $23 an ounce by the end of 2020.
On the other hand, analysts at Wallet Investor have taken a bearish stance. They refer to the commodity as a potentially “bad, high-risk 1-year investment option”. Considering their prognosis, your current investment in silver may be devalued in the near future.
This is what their silver price predictions 2020 looks like:
Based on the opinion of another popular forecasting agency, Longforecast.com, silver is expected to trade at $22.50 per ounce in January 2020, showing some volatility throughout the next year but still staying in the price range of $20.60 – $22.69 per ounce.
Here are their long-term silver price predictions for the next few years:
Analysts at Gov Capital have a much more positive outlook, saying that in by September 2024, the silver price will hit $86.260.
However, their one-year forecast looks less promising:
The bottom line
All in all, is silver a safe investment? Just like with any other asset, investing in silver gives no guarantee of financial success. According to the latest silver price forecast 2020 and beyond, you may want to add silver to your diversified investment portfolio to serve you well in times of economic uncertainty, rather than investing all of your money in this precious metal.
If you decide that silver is the right investment for you and it has good potential for future price appreciation, the next step to decide on how to invest in this commodity. There are, in fact, a plethora of options. One of them is to invest in silver through contracts for difference, or simply CFDs.
To learn more about silver CFD trading, check out free online guide provided by Capital.com.
Stay up-to-date with the latest financial news, and keep track of the silver prices live with the comprehensive charts on Capital.com.