In recent months, gold has had some record-breaking moments — spot gold prices reached $2,195.19, the then-highest amount, on March 8, and on March 14 rose to $2,222.14; then hit $2,222.39 on March 21. Silver, too, can hold appeal for investors, according to Kevin DeMeritt, founder and chairman of precious metals firm Lear Capital.
A number of sources, ranging from CNBC to investing.com, have at least partially attributed gold’s momentum to the anticipation the Federal Reserve will start to make rate cuts.
Since February 2022, the Fed has raised the target range for the federal funds rate 11 times. While inflation has since decreased — at times perhaps more gradually than hoped — interest rates have increased.
Cutting the federal funds rate’s target range could help bring rates down to a more affordable level; inflation, however, is currently about 3.2% and still hasn’t reached the 2% target the Fed has been aiming for.
Recent comments from Federal Reserve Chair Jerome Powell indicate that may not be a constraint for long, however.
Although the Fed opted to keep the target range for the federal funds rate at the same level at its March meeting, in a subsequent press conference, Powell said, “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”
The Future Rate Climate’s Influence
If the Fed starts making rate cuts — potentially as early as its next meeting on April 30-May 1 — gold prices might experience more steady movement.
According to some analysts, silver could be queued up to follow gold’s recent strong performance once the cuts begin.
As a CNBC article that Lear Capital shared this week pointed out, as gold prices shot up the week of March 14, spot silver prices rose more than 5%, reaching the highest level since late December 2023.
While Marcus Garvey, head of commodities strategy at the Macquarie Group financial firm, told CNBC that U.S. jobs and inflation data may either weigh on or boost gold prices, as both a precious and industrial metal, he says silver could outperform gold in the third and fourth quarter of this year, if global growth picks up.
Financial analyst and investment adviser John Rubino echoed that sentiment in a video shared on Lear Capital’s TikTok channel.
Rubino says not a single silver item was in stock when he recently stopped by a coin dealer — the dealer told him that’s because nobody wants to sell silver coins, and everybody wants to buy them right now.
“Because of that, there’s never any inventory on hand,” he said. “That’s the sign of a tight market. That usually resolves with higher prices, so this might be a good time if you can find some silver for sale to buy it.”
Silver’s Stunning Value Proposition
The Silver Institute, a nonprofit industry organization that provides market updates and analysis, has predicted, due in large part to rising industrial applications, the global demand for silver will reach 1.2 billion ounces this year — which would be a 1% rise and mark the second-highest level of demand on record.
The institute also noted while silver mine production is expected to increase 4% in 2024, the precious metal’s output could face challenges such as potential zinc mine suspensions resulting from weak zinc prices.
Production can be difficult also logistically, Kevin DeMeritt says.
“You can only pull so much out of the ground,” he says. “And even with new technology, we’re having to go deeper and deeper inside the Earth to get it.”
Local disputes are another concern. Political instability in Peru — a key silver provider — including political protests, slowed mining efforts in the country in 2024, according to the nonpartisan Council on Foreign Relations. The Silver Institute ultimately attributed the reduced output from Peru and China with centrally contributing to the record 253 million ounce global deficit of silver last year.
Silver recycling, according to the institute, is predicted to decline by 3% to a three-year low — perhaps adding to demand.
For the fourth consecutive year, the silver market is expected to experience a deficit, which the Silver Institute says would be “exceptionally high by historical standards.”
If that type of silver shortage occurs this year, it may not be the last time the world is left scrambling for the precious metal. The industry organization has also predicted demand will remain high enough for a shortage of silver to occur through 2027.
Lear Capital Suggests Keeping an Eye on the Silver Market
Some of the specific uses for silver have helped drive the interest in the metal in recent years.
“You have this industrial demand that we really hadn’t seen over the past 20 or 30 years,” Kevin DeMeritt says. “At the same time, it’s a pretty good hedge against inflation, as well. There’s going to be demand for silver from industrial uses, regardless if investors purchase it or not.”
In addition to silver’s industrial utilizations, the precious metal serves as a key component in the production of solar photovoltaic power. Solar installations are estimated to increase the solar capacity operated by the electric power sector by 38% this year, according to the U.S. Energy Information Administration — which could, Kevin DeMeritt says, equate to more demand for silver.
“Because there’s this drive for green energy around the world, solar has grown, and so has the demand for silver,” Kevin DeMeritt says. “I don’t think solar [power use] is going away.”
Economic conditions could also prime silver for a rise in value.
“Silver has become a highly in-demand asset, yet the available supply hasn’t vastly increased,” Kevin DeMeritt says. “The last time we had a recession, the price of silver went up about 350% [and] hit $47 an ounce. If we know there’s a recession coming, then the investment demand would [theoretically] start to pick up.”
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