Silver prices reached a decade high in 2024, driven by supply deficits, geopolitical tensions, and increased industrial demand. Experts predict similar trends for 2025, though potential headwinds include economic instability and policy changes under the new US administration.
1. Trump's Presidency and Policy Impact:
- Pro-business policies, like streamlined permitting, could benefit silver mining.
- However, potential rollbacks of environmental initiatives may affect the renewable energy sector, a key driver of silver demand.
2. Supply and Demand Imbalance:
- Industrial silver demand, especially for renewable energy, is expected to outpace supply.
- Supply remains constrained by limited production growth and challenges in major mining regions like Russia and Kazakhstan.
3. Mergers and Acquisitions (M&A):
- Rising prices may spur M&A activity, particularly among mid-tier producers and juniors, as companies address exploration and production gaps.
4. Price Projections:
On November 27, silver fell to a quarterly low of $30.11, but since then the precious metal has regained some ground. As of December 11, it was trading at US$31.88. Silver’s performance in 2024 was marked by significant volatility, strong industrial demand, and transformative industry mergers. The year began slowly, with silver carrying over its lackluster momentum from 2023, but expectations of rate cuts in late February and March pushed prices from the $22 range to over $25.
This momentum continued into Q2, with silver breaking the $30 mark, driven by surging industrial demand from India, which imported more silver in the first four months of 2024 than in all of 2023. The growth in India’s electrical, electronics, and photovoltaics sectors, supported by infrastructure investments and a booming real estate market, played a key role. However, Q3 saw silver retreat to $26 before rebounding above $32 in late September, aided by a Fed rate cut. The quarter also brought major consolidation in the industry, including First Majestic Silver Corp's (NYSE:AG) $970 million acquisition of Gatos Silver Inc (NYSE:GATO) and Coeur Mining Inc's (NYSE:CDE) $1.7 billion purchase of SilverCrest Metals (NYSE:SILV).
These deals expanded production capacities, positioning both companies as leaders in the silver market. Amid dwindling aboveground inventories, projected to deplete within 12–24 months, and robust industrial demand, silver’s outlook remains closely tied to economic trends, rate cuts, and ongoing industrial expansion. Silver is expected to reach $35 per ounce, with a possible pullback to $30. Long-term, prices could surpass $50, supported by sustained demand and limited supply growth.
5. Risks:
- Economic recession or broader market corrections could temporarily impact silver prices.
- However, government stimulus for green energy and infrastructure may offset some risks.
Investor Outlook: While the silver market offers significant opportunities in 2025, investors should remain cautious of macroeconomic and geopolitical uncertainties that could influence prices.