Is Silver a Good Investment in 2023?
Silver remains an exciting investment opportunity for 2022 and beyond.
The argent metal is known for its higher volatility compared to gold—a characteristic which was clearly on display over the past year in 2021. (For reference, you can read my colleague Joshua McMorrow-Hernandez's comprehensive article about investing in silver by following this link.)
This guide will walk you through the state of the current silver market, and I will highlight the trends that are positively or negatively affecting the silver price. I'll also include my silver price forecast for 2022 with an explanation of my reasoning and expertise.
Stacks of silver bullion coins.
Why the Outlook for Silver Is Bullish in 2022
Several factors caused the silver price to fall by more than 10% in 2021. (These are discussed in more detail below.) Nonetheless, there are a plethora of compelling reasons why the silver market has a bullish outlook.
- Resurgent physical demand (coins, bars) from retail investors
- Multiple delays in production from United States Mint and other mints
- Silver is an essential part of the future clean energy economy (solar power, electronics, electric vehicles)
- Silver is used extensively in the healthcare industry for its anti-microbial properties
- Chinese demand for silver for industrial uses hit an all-time high in 2021
- Global silver supply is likely to be in a deficit, i.e. a supply shortage
Silver also has a tendency to "play catch-up" with the gold price during bull markets for the metals. With the gold-silver ratio (sometimes abbreviated GSR, this is simply the ratio between the prices of the two precious metals) still near 80:1, I expect this measure to improve in silver's favor in 2022.
The Reddit #SilverSqueeze Generated Considerable Buzz
In addition to the strong drivers of silver demand listed above, other market trends have also raised silver's profile as an investment.
It was a year of growing speculative activity in financial markets. This mostly centered on cryptocurrencies and meme stocks, but silver also played a starring role in the market mania.
This relatively new phenomenon began in February 2021 with heavily shorted companies like GameStop and AMC. Much like the day-trading community that sprung up on Reddit known as WallStreetBets, the silver market spawned its own version under the subreddit /r/WallStreetSilver.
On forums and social media, the hashtag #SilverSqueeze frequently trended. It operated under the same idea as the meme stocks: large groups of retail traders would coordinate a "short squeeze" against hedge funds and the financial powers-that-be.
Initially, the strategy seemed to work. Silver prices jumped dramatically during the early spring. Billboards across the world began to pop up with the Wall Street Silver logo (seen below)—which was adapted from the original WSB character but given silver hair.
Wall Street Silver logo. Image via Reddit
Ultimately, the short squeeze gambit fell short of its goals. The silver price eventually returned to normal.
Despite the failure to send the price of silver "to the moon," the spreading awareness about silver on social media will undoubtedly have some lasting effect on traders and markets. I believe the excitement generated by this movement will carry over into 2022.
Silver Is Still an Extremely Undervalued Metal
Compared to other commodities that hit new highs in 2021, silver is still undervalued.
At the time of writing, the silver price is roughly half of its all-time high from 2011. This makes silver perhaps the most undervalued asset in the world even when other instruments like bonds and equities are included.
Silver's decline over the second half of 2021 was a bit puzzling given its myriad industrial uses and future potential in the solar and EV spaces. However, the U.S. dollar made considerable gains the past year. The dollar strength was certainly a headwind for the silver market.
The continued strength of the stock market in the United States also weighed on silver. All asset classes compete for a limited amount of investment dollars. So long as stock prices remained strong, silver investments saw outflows of money. I anticipate this trend will gradually reverse in the coming year.
An assortment of silver bullion bars of different sizes.
What Will the Silver Price Be in 2022?
Spot silver traded as high as $29 per troy ounce in 2021, but also as low as about $21/oz. In my view, silver will trade at the top of this range in 2022. My year-end target is for silver to break above the $30/oz mark for the first time since early in 2013.
Many researchers, investors, and financial professionals use mathematical models for their price forecasts. Whether these models rely on Fibonacci sequences, Elliot Wave theory, or any other framework, the idea is the same. They use mathematical patterns to predict future asset prices.
By contrast, my forecasting method relies on analysis of silver's fundamentals. My focus is on supply, demand, economic policy, and investor sentiment. With over eight years of experience working directly in the gold and silver markets, all of my predictions are informed by this background of expertise.
What Will the Value of Silver Be in 10 Years?
One important factor to keep in mind is the nature of the silver supply. Unlike gold, the majority of freshly-mined silver gets used up for various industrial processes. As a result, investment demand for silver is likely to outstrip the available supply in the coming decades. We've already seen brief instances of this scenario over the last two years.
Here are a few things to consider with any long-term investment in silver:
- Yes, it is possible we will run out of silver deposits to mine someday
- Yes, silver will be in demand in the future
- Silver demand will rise as more solar panels and electric vehicles are built
- Silver prices are volatile in the short run, but tend to rise in the long run
Given these reasons for optimism, I'm confident the price of silver will exceed its all-time high of about $50/oz within the next five years. I would not be surprised to see silver worth $100/oz by 2030.
The information in this article is intended for educational purposes only. It is not intended as investment advice. Consult a financial professional before making any investment decision.
Read more about investing in precious metals from the expert authors at Gainesville Coins:
Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.
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