Silver eyes $50 in 2025 as industrial demand grows and gold-silver ratio narrows
NEW YORK (November 7) Silver has struggled to keep pace with gold over the past year as the yellow metal hit multiple new record highs while its gray counterpart largely remained pinned below $30/oz, but according to one analyst, that could change in 2025, and the gold/silver ratio will start to moderate from its recent highs.
“Gold remains an investor favorite for hedging portfolios against various risks, but the shift from a ‘soft landing’ to a ‘no landing’ argues for greater balance between defensiveness and exposure to economic growth,” wrote Julian Wee, financial markets strategist at UBS. “Silver has historically been strongly correlated with gold, while being better able to benefit from expanding industrial demand.”
Amid the rise in geopolitical tensions, gold has emerged as the preferred way to hedge risk, Wee noted, highlighting that the yellow metal “has risen as much as 35% and demand continues to be robust amid multiple risk events and falling policy rates globally. This month at least, gold seems to have shown itself as the choice hedge against the risk of slower economic growth and an acceleration in inflation.”
“But gold is not the only precious metal whose price demonstrates an inverse relationship to risk aversion,” he said. “Against the backdrop of resilient US GDP growth, investors might do well to consider an addition to portfolios that retains a good amount of defensiveness, while also incrementally adding to the ability of these portfolios to benefit from stronger economic growth: silver.”
Wee joined the list of analysts warning that gold is due for a correction after months of up-only price action, saying that the most recent gains were “driven by growing expectations of a Donald Trump win in the US presidential race, in particular to trade tariffs, a higher US fiscal deficit, potentially slower GDP growth, and higher inflation.”
“Data from the World Gold Council shows that total demand has grown 5% year-on-year, with the quarterly total value exceeding USD 100 billion for the first time,” he noted. “Demand also appears to be broadening out: even as Asian central bank demand remains resilient, 3Q24 was the first quarter since 1Q22 that saw positive inflows from North American-based ETFs, as the Federal Reserve embarked on its rate-cutting cycle.”
While UBS still recommends a 5% allocation to gold in a diversified USD-denominated portfolio, expecting its price to rise to $2,900/oz around September 2025, Wee said silver is also a strong play as it is set to “benefit from spillover demand.”
“Historically, the price of silver has demonstrated a high correlation with the price of gold,” he highlighted. “Since July 2020, the gold-silver price ratio has been largely constrained within a 75-90 range; this is especially salient from 4Q22 as both silver and gold prices rose around 70% during that time.”
“While gold will likely remain the main vehicle for hedging risk, silver as another precious metal is likely to benefit as well,” Wee said. “But in addition to that, silver also benefits to a greater degree than gold from resilient economic growth and growing industrial demand, something that might be useful for positioning portfolios to take advantage of the robust global economy, while maintaining a degree of insulation against event risks in the coming months.”
Stronger industrial demand for silver will help propel the metal’s price higher, he suggested.
“Recent data points out of the US have pointed to a greater likelihood of a ‘no landing’ scenario—benign GDP growth with inflation close to the Fed’s target and growth at/above trend—rather than a ‘soft landing,’” he explained. “Additionally, we expect lower rates—not least of all in China—to kickstart a modest recovery in global manufacturing, which adds to silver’s industrial demand potential.”
With its heavy use in the tech and electric vehicle sectors, steady demand coming from the production of LEDs and solar panels, and applications in the medical field due to silver’s anti-bacterial properties, Wee said industrial demand will “likely see additional demand for physically-backed ETFs, with holdings already rising from 684mn oz in May to around 741mn oz in October. On the supply side, mining output should remain constrained in 2025.”
“We thus expect prices to reach USD 36-38/oz in 2025, and advise investors to stay long the metal or use it for yield pickup opportunities,” he said. “Last week’s fall in the silver price makes it a 6.2% consolidation from the late-October high of USD 34.83.”
“Additionally, it has seen the gold-silver price ratio rise from a recent low of just under 79 to around 84. Over the next 12 months, we expect this ratio to decline to the mid-70s, which implies an outperformance versus gold,” he concluded. “We therefore advise investors to stay long on silver and/or use it for yield pickup opportunities.”
Analysts at InvestingHaven are even more bullish on the gray metal, saying, “Silver will test ATH in 2025, and set new highs between 2026 and 2027.” They gave bullish price targets of “$50 in 2025” and “$77 before 2028,” adding a “silver peak prediction north of $82 by 2030.”
They highlighted five leading indicators that support this thesis: “Gold has to be in a confirmed secular bull market; Inflation expectations need to respect their long-term uptrend; The EURUSD cannot be trending strongly lower; Silver’s futures market may not show excessive concentration in terms of short positioning; and Demand for physical silver needs to go through the roof.”
“At the time of writing, all 5 leading indicators are mildly to wildly bullish, supporting a solid bullish case for silver in the years ahead,” the analysts wrote.
Regarding the recent change in the gold/siver ratio benefiting gold, they noted that “historical evidence suggests that the gold-to-silver ratio entering the 80 to 100x range may act as a signal for a significant rally in the price of silver. This ratio suggests that silver is extremely undervalued relative to gold.”
They also highlighted the “ongoing silver shortage in the physical silver market,” which they said “keeps on ‘deteriorating,’ supporting the silver bull market thesis.”
“The shortage did not resolve in 2024,” they noted. “In fact, there is an increasing number of signs that the shortage is only intensifying. Sooner rather than later, silver’s physical market shortage should be reflected in the price of silver.”
“As seen on the chart below, a giant cup and handle formation is unfolding on the silver chart,” they wrote. “That’s why we conclude that silver qualifies as THE investment opportunity of this decade.”
“The longest-term silver price chart has this unusually long (hence strong) cup and handle reversal pattern,” they said. “It suggests that silver will ultimately move to ATH. It will exceed the current ATH. While many investors are waiting for a silver bull market to take off, we are on record stating that the global silver bull market is already here!”
“Silver charts combined with silver price leading indicators confirm a strongly bullish silver story.
A mildly to wildly silver bull market can be expected in the period 2025 through 2030,” they concluded. “All leading indicators, chart patterns, and market dynamics are in favor of silver. We conclude that the price of silver will continue to rise mildly, combined with one or a few wildly bullish periods.”
KitcoNews
