2024-03-18 11:27:00
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According to experts, the price of silver might rise significantly more than the price of gold. A new regulation should, among other things, provide the necessary impetus for this.
• Good prospects for a strong development of the silver price
• Cheap silver coins are said to be making a comeback on the market
• Silver might benefit from gold’s rise
This year, silver’s performance might outperform gold. Nitesh Sha, asset manager at WisdomTree, expects silver to gain 9.2 percent in 2024 – significantly stronger than gold, which Sha predicts will rise 7.3 percent. “By the fourth quarter of 2024, we expect the price of silver to be more than $26 per ounce,” he writes in a recent commentary available to the trade magazine Institutional Money.
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Until recently, silver had performed less well: the price of silver fell by 0.65 percent, while the price of gold reached an all-time high last year. “This is surprising considering how much demand for silver has increased in industrial applications and how much the supply of the metal has declined in 2023,” Sha said. He goes on to say that the metal – taking into account investment demand – has experienced a supply deficit for three years in a row. However, this is set to change this year, as falling interest rates, as they are now expected, herald a convergence of metals. According to Sha, silver would perform better than gold in such a case.
The price developments of both metals are highly correlated. The correlation between silver and gold should remain strong in the future, says Sha. “So if we are headed for an economic recession, silver should benefit from the rise in gold,” Sha continues. Although gold should initially have the upper hand, Sha firmly expects that the silver price will ultimately dominate. “Industrial demand for silver has reached a new high, driven by demand in photovoltaics and the increasing use of silver in 5G technology and electronics in cars,” explains Sha.
He therefore assumes that industrial demand for silver and sentiment towards the more cyclical metal will continue to rise as a result. “According to our models, silver prices have historically moved up 1.4 percent for every 1.0 percent increase in gold prices. Although this leverage was weak last year, interest rate cuts will be the next big catalyst for both metals,” concludes Sha his prognosis.
Silver coins offer potential
At the beginning of the year, a regulation will come into force that should bring cheap silver coins back onto the market. What is meant is the so-called differential taxation. It means that traders only have to add VAT on the spread between the purchase and sale price of the silver, rather than on the entire amount. The Ministry of Finance abolished the regulation at the end of 2022. Now it will be intact once more under new conditions. For investors, it means that prices per troy ounce for products subject to differential taxation can fall by several percent. The lower taxation should encourage investors to consciously invest in silver this year.
Editorial team finanzen.net
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