At first glance, there isn't much going on in the silver market lately. The metal remains in the shadow of its “older colleague” - gold - and does not demonstrate the most outstanding dynamics. And yet, right now it’s worth paying attention to, experts advise, since the gradual recovery of the global economy will fuel the demand for metals, primarily industrial ones. Silver, although it is a precious metal, is actively used in industry.
Overall, the precious metals sector showed growth last week. This happened against the backdrop of a midweek drop in stock markets and rumors of a likely Fed rate hike due to rising inflation in the United States. Investors rushed to “safe” assets, and as a result, gold rose in price by 1.21%, to $1,808 per troy ounce. Silver showed negative dynamics.
However, writes Univer Capital analyst Artem Tuzov, the gradual growth of the global economy after the pandemic sets a long-term positive trend in industrial metals.
“The long-term upward trend in gold and silver prices continues. Investment demand for gold and silver is being replaced by jewelry and industrial demand. The rise of the global ESG agenda is creating additional demand for silver, which is involved in the production of both solar panels and electric vehicles,” he notes.
Anna Bodrova from Alpari agrees that the need for industrial production in silver could become a long-term support factor for the precious metal. So far, however, this is not working, since there are no strong enough signals about the recovery of the global economy. However, the outlook for silver remains more than positive, and investors are not discounting this metal, Bodrova says.
Precious metal not so much for jewelers as for industrialists
The head of the investment department at inv.lu, Anastasia Tarasova, notes that back in April of this year, Metals Focus consultants published a forecast according to which global demand for silver will grow to 1.033 billion ounces in 2021 compared to 896.1 million ounces in 2021. The pandemic is thus triggered a long-term increase in silver prices, as investors, in an unstable economic situation, showed increased interest in protective assets.
In 2021, according to Tarasova, there was a record increase in the volume of shares of exchange-traded funds - to almost 870 million ounces. In addition, due to quarantine restrictions, global silver production decreased by approximately 6.3%. In January of this year, the price for it rose to an eight-year high and amounted to $31.1 per ounce. Today silver costs $26.32 per ounce, and the price outlook for it remains positive, the analyst says. The price is expected to fluctuate between $26 and $31 per ounce over the next few years. This, Tarasova explains, is due to the continued growth in the number of private investors who continue to seek the purchase of defensive assets in the form of silver coins and bars, and increased demand for silver from industry, which is already projected to increase silver consumption by 9% . Most of the growth will be provided by radio electronics and electrical engineering.
In addition, the development of “green energy” (silver is used in the production of photovoltaic cells for solar panels) and the growth in global demand for silver jewelry may contribute to higher prices, the expert adds. Another factor supporting silver at current price levels could be that more than half of the metal is a byproduct of lead, copper and zinc mining, making it much more difficult to meet high demand, she said.
Silver rate forecast for the month ahead
Now per ounce (31.1 g) of silver they give $24.4. The rate may fluctuate slightly depending on the site. According to experts, the asset will continue to grow in price. At the end of October, silver will stop at $24.8. In another month, metal will cost $25.5.
However, throughout November the silver rate will behave differently. Growth will occur with some fluctuations, but the upward trend will stop in the middle of the month. It is expected that the highest figures will be recorded on November 15 and will amount to $27.5. On November 17th, silver will plummet to $25. If this prediction turns out to be correct, some players could profit greatly from the difference.
Then silver will rise slightly again, but the indicators will be below the November high. The downward trend will continue until the end of November. On some days there will be increases, but the price will go down. This data is based on the analytical tools that traders use.
Experts' forecasts are in approximately the same range. Therefore, it makes no sense to talk about a serious difference in assessments. In the short term it doesn't show up as much.
No particular volatility
You shouldn’t attach much importance to volatility in the silver market, believes Nikolai Pereslavsky, an employee of the department of economic and financial research at the CMS Institute. The current situation is more like a slight deviation from the trend against the backdrop of a strengthening dollar and growing interest in gold. In addition, the decline in the price of silver was not out of the ordinary - only 1.41% for the week and closing on Friday at $26.09 per troy ounce. In addition, the expert notes, the metal is actively regaining its position. Therefore, some correction in silver can be perceived as a purely technical issue - production in the world is being restored unevenly, so jumps are possible in the future.
Pereslavsky is confident that markets will gradually win back the fall in silver since mid-June, when the metal lost about 7% of its value. Quotes will be positively influenced by vaccination in producing countries - Russia, South Africa and other countries. At the same time, pressure on the metal will be exerted by the spread of the “delta” strain and a decrease in activity in
the production of 5G towers. It is necessary to evaluate both the end of the rally in the commodity markets and the gradual return of metal quotations to last year’s values, which also negatively affect the quotations of silver as an industrial metal.
Gold will await further developments regarding inflation, the spread of the new strain, as well as the results of quarterly reports of leading American banks and the Federal Reserve forum, which will be held in August in Jackson Hole. Until this time, any changes in quotes are unlikely, unless strict lockdowns happen again, the expert is sure.
One way or another, since the peak of the crisis in 2021, silver has more than doubled and, in theory, could reach $50 per ounce in the coming years with the development of 5G systems. Therefore, this metal can be a good investment in the long term, the expert concludes. At the same time, he adds, gold will gradually cease to be a speculative story and will once again acquire the status of a conditional “safe haven” with a small but constant annual increase in quotations. For conservative investors, this is what is more interesting.
Silver rate forecast for 2022
At the end of 2021, silver will fall to $24, some optimistic experts predict figures at $25.1. These values are important because they provide insight into the start for 2022.
There is an opinion that the rate of the precious metal will continue its downward movement. Over the course of the year, silver will fall in price to $22. The lowest point will be June, when the rate drops to $19.4. In January, February and March, silver will fall by 5.4%, 2.1% and 6.2%, bringing it down to $20.8.
In April, the precious metal will regain 6.2% and rise to $22.1. Then over the course of 4 months there will be a two-month drop of 6.2% and a similar increase. In September, the rate will rise by 1.8% and fix at $22.3. These are the highest figures of 2022, excluding January.
In October, the asset will fall in price by 1.1% to $22. In the last 2 months of 2022, silver will first fall in price by 6.2%, then rise in price by the same amount. These are the data based on the analysis of exchange instruments.
But there are other opinions regarding the future price of silver. For example, American expert James Anderson admits that the metal can rise to the level of $30-40. This will happen if the US economy begins to decline. However, this assessment looks overly optimistic. Not all experts share it.
What determines the price of silver
Lunar metal has been processed and used for calculations for several hundred years. Not only coins are made from it, but also a variety of things. Now the final price of products is set based on several factors:
- Situations on the world market. Fluctuations in the exchange rate depend on the supply and demand of major players.
- Metal purity. In most cases, in a jewelry store you buy a product made not from pure silver, but from an alloy of it with copper or other materials. The higher the numerical value of the sample, the smaller the amount of other metals contained in the alloy. In silver of 999 purity there are less than 0.01% impurities, and in 925 – 7.5%.
- Origin of the product. People on the market are willing to pay more for antiques than for a recently made piece of jewelry or household item. An important part of the assessment is the condition of the item; if it is deformed or severely scratched, then it can be accepted as scrap - by weight.
- Shape – bullion products and jewelry are valued differently, even if they have the same hallmark.
- Use of other materials in the alloy. In most cases, silver is mixed with inexpensive copper, but for some products platinum, palladium or other expensive metals are used.
Pricing also depends on the manufacturer of the silver product: Chinese products are the cheapest, Russian ones belong to the middle price category, and Italian ones are considered the best.
In a store, the cost of a gram will be higher than in a pawn shop, where they usually set two prices. If you pledge silver, it will be valued at the minimum rate. When selling, the amount will be higher.
925 sterling silver - what is it?
925 silver is one of the highest quality and is widely used in Russia abroad. The composition of the 925 silver alloy includes 92.5% pure precious metal, the remaining 7.5% is copper. This ligature was approved by a single GOST back in Soviet times. Copper imparts the required strength to the metal and significantly improves its characteristics. Less commonly, platinum is used as an additive. Due to this expensive component, the properties of silver are improved, it acquires a snow-white color and its oxidation is significantly reduced. In modern production, palladium, which belongs to the platinum group, and cadmium can be used as an additional element. Jewelry made from an alloy containing platinum or palladium has a higher price. Thanks to this noble metal, the jewelry becomes dazzling white, with an incredible blue cold tint.
What is 925 silver
In Russia and abroad, 925 sterling silver is very popular, as it is characterized by high quality. The alloy consists of:
- 92.5% precious metal without impurities;
- 7.5% – copper.
The composition was approved back in Soviet times. Copper is needed to increase the strength of the metal and improve its characteristics. Platinum is also used in the alloy, but this is quite rare due to the high cost of the component. With this combination, the color of the silver product becomes whiter and it is less susceptible to oxidation.
Palladium is widely used - the product is distinguished by its high price, snow-white color with a cool blue tint.
The composition may contain 7.4% zinc - in this case, the product looks more cloudy and at the same time durable, and has a reasonable price. This combination is not popular, since the component is a common allergen.
Long-term silver rate forecast until 2023, 2024 and 2025
It is very difficult to make a long-term forecast, since in this case the time period covered is too long. If you analyze stock charts, you can see that the silver rate will not undergo major changes.
In 2023 it will rise to $23.6, the highest figures will be in April – $25.6. Silver will end 2024 at $24.4, with August being the most successful at $26.5. In 2025, there will be a decrease to $23.7, the lowest rate will be recorded in September – $22.1.
The optimistic forecast differs markedly from the data listed. Some experts believe that silver will continue to rise. At the end of 2022, this metal will fetch $27.6, in 2023 – $28.6, in 2024 – $36, in 2025 – $44.1.
It is difficult to say exactly what the real scenario will be. There are many nuances to this issue. A clearer picture will become visible in 1-2 years. So far, experts have different opinions regarding the “price behavior” of silver. The pandemic can also have its “weighty word” here. It is unclear exactly when it will end and what the consequences will be.
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Factors influencing the silver rate
The cost of this precious metal depends on several factors, including:
- industrial development;
- production;
- economic situation;
- stock quotes;
- speculative actions.
Silver is used in many areas - industry, medicine, jewelry, science. This metal is characterized by large volumes of production, which is explained by its reserves and popularity. This is a very popular component in the production of various products.
Silver is used to make jewelry, cutlery, and is used in photography and computer technology. Silver elements are found in mobile phones, televisions and other electronic devices. It is the demand for the metal that determines its price. Therefore, it may periodically rise or fall.
The silver rate also seriously depends on the behavior of the dollar. This explains the frequent fluctuations in the value of the metal. For example, gold behaves much more stable in this regard. At least that's what some experts say. The price of shares of large American companies involved in the export and import of goods also has an impact.
At the same time, the level of silver production in a particular country does not affect its price. The metal itself is important, not where exactly it is mined. Exchange quotes are of great importance here; they set the tone in shaping the cost of the precious metal.
The speculative actions of “serious players” cannot be discounted. Large volumes of sales and purchases of silver lead to price corrections down or up. However, these are actions that provide a temporary effect to achieve a specific benefit. Then the market situation stabilizes, and the value of the asset becomes more objective.
Product care
With proper care, silver jewelry will delight its owner for a long time. It is better to ensure storage in a dark and dry place, away from direct sunlight, which causes the metal to darken and become duller. If the composition contains rhodium, platinum or palladium, the product is more protected from external factors.
Cleaning silver includes the following manipulations:
- Wash in water and detergent and dry using a soft cloth.
- It is advisable to use toothpaste, but do it carefully so as not to damage the jewelry.
- You can use a weakly concentrated solution of ammonia, in which the product is placed for 10 minutes, and then washed and dried.
- Soda is also used - you will need to boil half a liter of water with 40 grams of soda, place a piece of foil and the product there. After 10 minutes of the procedure, the jewelry is washed and dried.
It is worth noting that the use of special means for cleaning jewelry is becoming quite widespread.
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