Silver and Gold Broke Records in 2024. Will They Do It Again?

Summary

Silver has had an extraordinary performance in 2024, outpacing gold in percentage return despite gold's record highs. With a forecast of $35-$40 per ounce, silver's potential for 2025 is impressive, driven by supply constraints and growing industrial demand, particularly in green energy. While gold remains a stable financial asset, silver's higher volatility presents both a risk and opportunity for investors. Both metals serve important roles, with gold providing stability and silver offering higher upside potential, making them complementary investments for those seeking a balanced approach in precious metals.

Takeaways

• 😀 Silver has had an extraordinary performance in 2024, with a 42% return on investment compared to gold's 37%.
• 😀 Gold and silver are both precious metals with intrinsic qualities that make them vital global currencies, but silver has more industrial uses.
• 😀 Silver tends to follow gold's price movements, albeit with a delay, and its price can sometimes outperform gold relative to its lower price.
• 😀 Analysts expect gold to rise to $3,000 per ounce in the next 12 months, while silver is projected to increase to $35-$40 per ounce.
• 😀 Although gold is expected to increase by $350 per ounce, silver's relative performance might offer a superior return on investment due to its lower base price.
• 😀 Silver mining production has been declining, with global silver output dropping from 900 million ounces in 2015 to 830 million ounces in 2023.
• 😀 Around 80% of silver comes as a byproduct of mining other metals, making it harder to increase supply in response to rising demand.
• 😀 Industrial demand for silver is growing, particularly due to its use in solar panels, electric vehicles, and green energy technologies.
• 😀 The tight balance between declining silver supply and increasing industrial demand positions silver for potential price increases in 2025.
• 😀 While gold is primarily a financial asset, silver is more volatile and its price movements are more dramatic, making it riskier but with higher potential returns.

Q & A

What is the current performance of silver compared to gold in 2024?

Silver has been performing exceptionally well in 2024, with a return on investment of 42% from its low point around $22 to its current price of $31.30 per ounce. In comparison, gold has also seen strong performance, reaching new all-time highs, but silver's relative return is higher.

Why is silver's price forecast expected to rise in 2025?

Analysts forecast that silver will rise to around $35 to $40 per ounce in 2025 due to a combination of factors, including tightening supply and growing industrial demand, particularly from industries like solar panels and electric vehicles.

How does the industrial use of silver differ from gold?

Silver has far more industrial applications than gold. While gold is primarily used for financial stability and as a store of value, silver is critical in various technologies, including solar panels, electric vehicles, and electronics, leading to higher demand for industrial uses.

What impact does the relationship between gold and silver prices have on silver’s performance?

Silver generally follows gold’s price movements, but with a delay. If gold prices rise, silver prices typically increase as well, although silver often experiences more dramatic price swings due to its smaller market size and higher volatility.

Why is silver’s mining output in decline?

Silver mining production has been declining in recent years due to several factors, including a decrease in primary silver mining operations. Nearly 80% of global silver production is a byproduct of other metal mining, such as copper and zinc, which has been increasingly constrained.

What role do central banks play in the performance of gold compared to silver?

Central banks are significant buyers of gold, which supports its price stability. In 2023, they purchased over 1,000 metric tons of gold, and this trend is expected to continue. In contrast, silver is less influenced by central bank purchases, as its demand is primarily driven by industrial uses.

How does silver’s price volatility compare to gold’s?

Historically, silver has been more volatile than gold, with larger price swings both upward and downward. This makes silver a riskier investment compared to gold, which tends to exhibit more stable price movements.

What are the potential risks of investing in silver?

The main risk of investing in silver lies in its higher volatility compared to gold. If gold’s price falls due to factors like a stronger dollar or reduced central bank buying, silver’s price could also drop, potentially at an amplified scale.

What are the benefits of holding both gold and silver in an investment portfolio?

Holding both gold and silver can provide a balanced exposure to both commodities. Gold offers stability, while silver offers the potential for higher returns, making it a way to diversify within the precious metals market and manage risk.

What is the role of silver in green energy technologies?

Silver plays a critical role in the green energy sector, particularly in the production of solar panels and electric vehicles. In 2023, over 100 million ounces of silver were consumed by the photovoltaic industry alone, with this number expected to rise in the future.