Where is silver headed in 2021?

Things have been heating up in the precious metal’s market and silver, along with gold has had a good run. There are lots of predictions that have been made about where the price of silver is headed. Here are some of the predictions that analysts have made about the price of silver and where it is headed:

Silver broke through the $30 mark at the height of the bull run in 2020. Most analysts predicted a silver run peaking at $32 range. The difference between $30 and $32 in terms of the precious metal market is quite wide. Silver is known for being very volatile. The fact that the market is also very small, means that the smallest changes can have a big impact. The swing between the low end and high end of the spectrum can be dramatic.

What factors affect these dramatic swings?

There are a number of variables that can impact the price of silver but the ones that are likely to affect the price in 2021 and beyond include:

Industrial Demand

More than half of the silver that is produced in the world goes towards industrial applications and then the rest is split between various industries. Industrial demand can also be affected by environmental policies that governments adopt. Right now, the U.S which has been the biggest offender as far as industrial pollution is concerned but President Joe Biden is very pro-green, which means there will be more restrictive policies put in place to curb the country’s industrial pollution problems. However, to kick-start the economy and to grow it, there is no way the government can run away from an increase in industrial demand. To add to that, silvers plays a big part in green technologies. The demand for those is set to increase.

Investment Demand

Investment demand has also grown. This growth is not new. Investors have being buying up silver bullion for investment purposes since the 1960s. When investment demand goes up, so does the price of silver and more investors will be looking at ways to sell silver bullion.

So, what’s happening: Are people buying or selling more silver?

The Silver Institute has predicted that despite the reduction of the Corona Virus, the opening up of markets and the availability of vaccines, the price of silver will still rise in 2021.

Silver Beyond 2021

If we look at the price of silver over a protracted period of time, i.e. the next five years or so, the biggest driver looks to be monetary dilution. When currencies like the dollar or Euro lose their value, precious metal assets like gold and silver benefit.

The US may have pledged trillions of dollars as a post Covid Stimulus Package, but the truth is, the U.S does not have trillions of physical currency lying around. Where is this money going to come from?  It will have to be created, either digitally or physically. Monetary stimulus on its own is almost 95 times more than the yearly production of silver. This is a catalyst to increased silver prices. So what now? Keep your eyes on your precious metals and sell silver bullion when prices seem to be rising.

Thomas Salazar
the authorThomas Salazar