Will silver reach $100 an ounce?
Buying silver is a common way for people to diversify their investments and savings, especially during economic crises and inflation. Unfortunately, we are raising the cost of the precious metals facing those challenges today, and it should come as no surprise that there is talk of a probable increase in the price of silver. Financial experts expect a rise in the cost of the precious metal in the next couple of years.
A bar of silver is among the safest investment choices you can make in today’s economy. Silver relies heavily on debt and money printing since they are debt-free. Debt-free means that the value of the commodity, in this case, silver, will rise when central bankers print money, and with the world’s economic situation right now and inflation, there’s a lot of printing going on. This is also one of the reasons for the super-bullish trends for gold and silver. Several central banks worldwide have often released bullish forecasts for precious metals because, they say, the government cannot print silver or gold.
However, we will be looking at what factors could result in the rise in the price of silver, what possible triggers could set this trend in motion, and possibly answer the question, “Will Silver hit $100 an ounce?”
Due to their rarity, precious metals are highly coveted. They are made up of platinum, gold, and silver. Although most investors prefer gold, silver is a popular metal due to its low cost and wide range of applications. Silver is extensively utilized in the manufacture of jewelry and coinage and the photographic business. It’s also a critical component of electronics.
Many silver enterprises own and operate mines where silver and other precious metals are extracted. The majority of these companies are also involved in the silver manufacturing process. Around 26,600 tons of silver were mined in 2018. China, Mexico, and Peru mined the most silver that year. The US provided about 870 tons of silver. The bulk of silver was generated by miners of lead, zinc, copper, and gold as a byproduct.
Investors and traders buy silver in commodities markets. The precious metals commodities markets of Japan, London, continental Europe, and the United States are all interconnected. Silver is available in the form of bars, coins, and bullion. Exchange-traded funds (ETFs), equities in silver firms, and mutual funds are examples of assets backed by precious metals but do not need physical possession.
The spot price of silver is the price paid by an investor for a single ounce of the metal for immediate delivery. Typically, investors are charged a premium on top of this price for whatever transaction they make. The price of silver is determined by the ounce.
While most attention is given to the price movements of gold in the global marketplace, many view silver as of critical importance in understanding the potential activities of commodities markets and the overall market, this is because many buyers and sellers trade silver based on global-macro trends.
Silver prices move based on various factors, including supply and demand, inflation, and the strength of the dollar. Prices tend to rise when the stores are low. When the dollar weakens, investors look to more stable investments like precious metals, such as silver, as a safe place to park their cash.
The per-ounce price of silver reached highs in the early 1980s of more than $20 per troy ounce before dipping back down in the 1990s. By 2014, the price rose to around $19 per ounce. The average closing price for silver in 2020 was $20.69 per ounce.
What factors could make silver go up to $100 an ounce?
Although the price of silver will have to grow by more than 400% to reach $100 per ounce, it is not out of the question. Will the price of silver rise? Here are all the drivers that might push silver to new highs.
The Stock Market’s Uncertainty
Even though the price of silver is mainly unrelated to the stock market, valuable metals prices have traditionally increased when equities values fell. If indeed the stock market has a downturn, the cost of silver may rise. Financial markets were at their peak in December 2021, but they fell in early 2022, possibly indicating that markets are overvalued. The Buffett Indicator corroborated everything, which analyzes stock market valuation concerning GDP (gross domestic product).
The Buffett Indicator indicates that the stock market is overvalued, which might increase the consumption of silver and cause the price of silver to rise.
When consumers lose faith in the stock market, they ask questions like “Will silver ever reach $100 an ounce?” or “what other investments can I switch to?” History suggests they may resort to silver as a defensive investment to protect their wealth.
The silver-to-gold ratio suggests that silver is now relatively cheap
Silver is presently trading at half of its all-time high, making it an attractive investment. By comparing silver prices to gold prices, we can determine how cheap silver is. This is referred to as the gold-to-silver ratio, and it is something that experienced precious metals traders and investors keep an eye on to see where the pendulum will swing next. The gold-to-silver ratio is the number of ounces of silver needed to purchase one ounce of gold.
Simply do the following computation to determine the ratio:
gold-to-silver ratio = price of gold / by price of silver
Here is an example, using today’s market price:
~$1,800 (gold) / ~$20 (silver) = ~90 (ratio)
The gold-to-silver ratio has varied dramatically during the last century, averaging about 50. This means that to achieve the average, silver must be priced at $34.40, and any buyer entering the market today will realize a significant profit
Rising Popularity of Renewable Energy and Electronics
Silver demand is at an all-time high due to its use in a wide range of expanding industries, including renewable energy, solar power, and other critical green initiatives addressing climate change. Silver demand is higher than ever, perhaps pushing the price over $100 per ounce. The need for silver has grown considerably since 1960.
Silver is also used in the production of mobile phones, which are in high demand worldwide because almost everyone uses one in their daily lives. As a result of these factors, silver demand is expected to rise progressively shortly.
Rising US Inflation
Inflation is one of the most significant factors influencing the price of silver. During the 1970s inflation crisis, the spot price of silver per ounce soared from $12.40 to over $50 in less than ten years. The current price of the precious metal has increased by more than 400 percent. Many analysts speculated in the 1970s that silver would continue to rise and eventually reach $100 per ounce, and this scenario is becoming more plausible today.
If we face another inflation crisis on the scale of the 1970s, silver may reach $100 per ounce in far less than a decade if the correct variables align.
- Limited Silver Mining Supply
Even though demand for silver continues to climb, output fell dramatically during the epidemic. Many silver mines were forced to close, and most of them are still not operating at total capacity.
Even while new steps have recently been implemented to get many of the mines back up and operate safely, most of the output still suffers, resulting in a supply shortage. Increased demand and limited supply are telltale signs that silver prices may rise.
Because silver’s supply has flattened, increased demand may cause the price to rise, maybe to $100 per ounce. While demand for silver is rising, supply has leveled, potentially pushing silver prices higher.
- The Russian invasion of Ukraine and the Global Political Unrest
Silver prices have historically climbed during times of global turmoil. The war between Russia and Ukraine affects the global economy, and its consequences are already being felt in the United States.
Russia supplies a considerable amount to the world’s precious metal supply, accounting for around 2.6 percent of silver, 15.1 percent of platinum, 9.2 percent of gold, and an incredible 45.6 percent of palladium. Because their supply has been cut off from the US, the price of silver is expected to climb.
Taiwan also deems itself an independent country, although China considers Taiwan a part of its country. If the conflict between China and Taiwan worsens, the price of silver per ounce might skyrocket as political tensions spread throughout the globe.
- Challenges in the Global Supply Chain
Because of COVID-19, 2020 will see dramatic changes in almost everything. One of the pandemic’s effects has been the difficulty of shipping commodities throughout the world. Many industries may have to pay higher costs for silver to satisfy their production objectives since the global supply chain for silver can no longer provide the precious metal in the same manner as before the epidemic.
When Can Silver Hit $100 an Ounce?
To reach $100, the price of silver would have to grow 400% from its current level. Here are three scenarios in which this may occur.
Inflation spirals out of control in 2023.
Silver will reach $100 per ounce the quickest if inflation approaches double digits in 2022 and 2023. The inflation rate is expected to be around 5% in 2021. Since 2008, this has been the most remarkable rate of inflation. Inflation will probably climb, drawing more investors to precious metals as a haven.
Inflation rates will rise in 2025 due to the US debt
Even if inflation is brought under control, investors should be concerned about another risk: US debt. The US debt is at $29 trillion at the moment. Bondholders may eventually force the US to pay them a higher interest rate. Higher interest rates, weaker stock market returns, and a rush toward gold and silver might all result from this.
Precious metals outperform stocks during the decade 2030.
Finally, the stock market may simply get hot, prompting investors to seek out products that have underperformed over the prior decade. This may encourage investors to consider silver. This might be a rerun of the 1970s and 2000s when silver outperformed the US stock market.
Frequently Asked Questions About Silver Price
What is the total amount of silver above ground?
Given that there are only 6 billion ounces of gold and silver above ground, the price ratio must be significant. Everything is fine.
Do silver coins have any industrial applications?
Silver is said to have over 10,000 industrial applications. But is it truly there? The unique features of silver, such as its high thermal and electrical conductivity, will ensure that it remains a leader in industrial and electrical engineering.
How much does gold cost compared to silver?
Gold is more valuable than silver. Why carry 60 ounces of silver when one ounce of gold suffices? The money is still profitable: 55 pounds of silver can be worth up to $4,500. Silver corrodes.