Silver’s price outlook
Technical analysts with a good track record are forecasting significantly higher prices for silver. This article looks at the fundamentals which might drive it there.
If it wasn’t recognised as such until recently, silver has now become a critical mineral. That at least is the relatively new position for the United States. Not only has silver’s industrial demand soared, but its history as a monetary metal particularly in Asia has led to small investor demand in China and India clashing with its growing industrial, technical, and military importance.
After Mexico, China is the second largest national producer of silver at 110 million ounces (3,421 tonnes), including extraction from non-ferrous ores.
For years, growing global demand has led to substantial supply deficits, reflected in the Silver Institute’s calculations below.
On these estimates, there have been seven years of deficit allowing for ETPs —more commonly referred to as ETF investment vehicles. And we are heading for another deficit this year, which UBS estimates will be 293moz against Metals Focus’s 76.3moz.
The reason silver’s price has not reflected these deficits in the past is that China has been managing the price, probably for decades ever since the PBOC was given sole responsibility for managing the nation’s stocks in 1983. It explains why until 2025 the price was suppressed reflected in a rising gold/silver ratio.
China’s silver exports, technically unwrought silver in the trade statistic category HS7106.91 are shown below.
