Often, in the precious metals sector, all eyes are only on gold. In the wake of the Corona crisis, the threat of recession and the enormous amounts of money that governments and central banks are pumping into the market as economic stimulus, the price of gold had risen to a new all-time high in August and had broken through the magic barrier of 2000 US dollars / fine ounce.
What many did not have in view and was also lost in the media is the development of the silver price. In the shadow of gold, silver also reached a new high in the summer of 2020 after years of stagnation. After a phase of consolidation, silver now stands strong again at the beginning of January 2021. Although the record level of 2011 of more than 47 US dollars has not yet been reached, the journey should continue upwards.
Current silver price development
The development of the price of silver in 2020 was of course also influenced by the Covid 19 virus. The troy ounce of silver started the year 2020 at around 18 dollars. In mid-March, when Western countries also imposed lockdowns and the effects of the pandemic on the global economy became tangible, the price for the troy ounce of silver then sank to a low of 12.27 dollars. Silver was thus at its lowest level since 2009.
After the silver price initially recovered to around 15 dollars in March and April, and then to 18 dollars per troy ounce in May and June, the price rose significantly to over 20 dollars at the end of July 2020 until it even reached a high of over 28 dollars for a troy ounce of silver at the beginning of August. In parallel with the gold price, it entered a consolidation phase in the fall, with silver falling back to 23 dollars in some cases. In January 2021, it temporarily went up to 29 dollars.
Currently, in mid-November 2022, the price of a troy ounce of silver is now back at around $21.
You can always find the daily silver price in our silver price chart:
Silver as a commodity & safe haven
Silver is used in industry to a greater extent than gold: Demand for the industrial metal is therefore also much more dependent on the economy than is the case with the pure precious metal gold.
For example, the price of silver visibly collapsed at the beginning of the Corona crisis, as it was feared that Chinese industrial companies would not demand silver, whereas the price of gold, as a "safe haven", shot up in parallel.
Unlike copper or zinc, silver also has a role as an investment metal at the same time as the "little man's gold". In fact, silver is just as suitable as gold and other precious metals for hedging one's own assets. Especially as an admixture in the portfolio, silver makes perfect sense.
Unlike investment gold coins, there is only a slight difference between the nominal value and material value of silver coins. Thus, with silver coins you can enjoy a double hedge: If the silver price falls sharply, silver coins retain their nominal value in any case.
Silver price forecast
It is not easy to make a forecast for the future development of the silver price and, of course, it is highly speculative.
If you look at the forecasts of the analysts of major banks and players on the market, they saw the silver price at the end of the year somewhere between 16 and 23 dollars. However, all these estimates come from the times before Corona.
As far as silver is concerned, however, it can be stated that supply and demand have already been diverging for years. While the industry requires ever larger quantities of the raw material silver, the amount of silver mined has been declining for years.
Since silver, like other precious metals, is traded worldwide in U.S. dollars, the development of the dollar, and for us in Austria of course above all the relationship of the dollar to the euro, has a considerable influence here as well. The flood of money, which is supposed to counteract the global economic downturn according to Corona, is likely to lead to inflation sooner or later and drive the silver price.
The ratio of silver to gold is often used as a tool for price forecasting. To calculate the gold-silver ratio, simply divide the gold price in dollars per troy ounce by the silver price in dollars per troy ounce. It is presented either as a relative numerical value, or as a ratio.
The value says, finally, how many silver ounces can be exchanged for one ounce of gold and is nothing else than the price ratio of gold and silver. The higher the ratio, the lower the value of silver against gold.
The gold-silver ratio helps to find out whether one of the two metals is undervalued or overvalued.
In addition to the comparison of the "natural gold-silver ratio", i.e. the ratio of naturally occurring resources, the historical gold-silver ratio is particularly helpful. Since the early 18th century, the gold-silver price ratio has fluctuated between 1:10 and 1:100.
Currently, the GSR value is around 72, so this tends to indicate that silver is cheap relative to gold.