Analysts: Two major positive incentives in 2024, silver prices are expected to double and soar

Market analysts say that if global supply continues to fall short of demand in 2024 and the Federal Reserve's interest rate cut cycle begins, the precious metal will experience a price doubling and soaring.

Peter Spina, president and chief executive of GoldSeek, said silver prices could explode if global supply continues to fall short of demand and the Federal Reserve follows through on its plans to shift to interest rate cuts in the coming months. He noted that the window of opportunity for silver is closing, looking ahead to hitting $50 in 2024.

Although silver has underperformed gold this year, with prices hitting record highs this year, the opportunity to snap up silver at low prices may be short-lived. "The window to buy silver around $20 is coming to an end," Spina said.

He told MarketWatch that silver prices could rise to the main technical resistance level of $30 an ounce in 2024, adding that he "fully" believes that and believes price barriers will come down.

In response to the recent underperformance of silver, Keith Weiner, CEO of Monetary Metals, said that in general, silver has moved much more strongly with gold than with other commodities such as copper or oil, and silver has tended to move more than gold.

That, he noted, is where silver has fallen recently, falling for an eighth straight session on Wednesday, its longest losing streak in a year and a half.

Currently, both gold and silver are experiencing similar "deficient investment demand" trends.

Chris Mancini, research analyst at Gabelli Funds, explains that this is because interest rates are still high. He says this is mainly reflected in outflows from gold and silver-backed exchange traded funds. However, gold has benefited from a surge in demand from central banks this year, which are buying gold to "get rid of the dollar".

Citing Metals Focus data in mid-November, the Silver Institute said it expects global physical investment demand for silver to be 263 million ounces this year, down 21% from 333 million ounces in 2022.

The slight rise in silver prices came after the Federal Reserve forecast three rate cuts in 2024, instead of the two predicted by the previous September dot plot, marking a sizeable change as silver prices had been in a sustained downward trend for a year before Wednesday's rally.

The prospect of the end of the Federal Reserve's rate hike cycle has weakened the dollar and Treasury yields, providing support for dollar-denominated gold and silver prices.

Spina mentioned that, as a result, the temporary stress caused by these fears has been eliminated.

Federal Reserve Chairperson Jerome Powell said Wednesday that central bankers have begun discussions about when to cut interest rates.

John Williams, the president of the New York Fed, appeared to refute those remarks, telling CNBC on Friday that Fed officials are not really talking about a rate cut right now.

Mr. Weiner of Monetary Metals said that at some point the Fed would have to change its approach to interest rates. "When they do that, it will be a catalyst for gold and silver prices to go up, maybe even higher," he said.

"We are in a long bull market right now, this is not the bear market of 2012-2018."

Meanwhile, global silver supply is expected to outstrip demand for the third consecutive year this year.

"The fundamentals of the silver market are very bullish," Spina explained, especially as silver continues to run structural deficits.

The Silver Institute report shows that global silver industry demand is expected to grow 8% this year to a record 632 million ounces, driven by PV investment (for solar (000591) technology, grid and 5G networks, consumer electronics growth).

Global silver supply is expected to be around 1 billion ounces in 2023, while total demand is expected to be 1.143 billion ounces.

Metals Focus said it believed "the silver market deficit will persist for the foreseeable future".

At present, the only last important driver missing from the skyrocketing silver price is investor interest.

Spina pointed out that silver is a "precious green metal" that has benefited from strong growth in forced green energy demand, which will continue to "push industrial demand to new records".

Meanwhile, silver inventories are "depleting" and Spina continues to say that structural deficits in physical silver compete for remaining inventories.

"If gold hits a new all-time high in the next few weeks, silver would be in a perfect environment to test $30 and possibly break above $50 in 2024," said Peter Spina, who expects silver to "re-challenge" the high.

"If not sooner", it will reach $30 an ounce in the next few months, "he said after observing the initial direction of gold prices.