2024 Silver Market Forecast: Economic Environment Supports Price Rise to $34.43

2024 Silver Market Forecast Video by Bruce Powers

2023 Market Review

Silver prices spent much of 2023 consolidating in a relatively narrow range. It is on track to close almost flat for the year. As of late in the session Friday, December 29, silver is trading around $23.82. That shows silver down by $0.09 or 0.4% for the year. A high to low trading range was established relatively early in 2023. By May, a low of $19.76 was reached and a high of $26.12. Subsequent price action was contained within the established price range for the remainder of 2023 as volatility tightened for the rest of the year. The low for the year at $19.76 was hit on March 9 and had silver down by 17.5% or 4.16 points. On the upside, it was up as much as 9.2% at the year’s high of $26.12, reached on May 5.

Economic Outlook

The possibility of a recession in 2023 could mute demand for precious metals and other commodities.

However, changes in expectations of how fast interest rates may be lowered by the U.S. Federal Reserve and other central banks should have a positive impact on prices of other commodities as well as precious metals. Lower interest rates make assets that don’t produce income more attractive. Further, there are the conflicts in Ukraine and Israel. Those conflicts could spread, and new ones occur thereby driving haven assets, such as silver.

Silver Demand

Supply for silver is influenced by the fact that it is both a precious metal and used in industrial and consumer applications. Demand for silver is driven by mine supply, industrial demand, green technology demand and investment applications. Analysts anticipate that mining supply will remain muted in 2024 (below all-time highs) and below historical levels as investment in capital expenditures has been down in recent years. To increase mining production investment in capital needs to increase.

Increases in industrial demand are generally due to stronger economic growth. The stock market seems to be anticipating an improvement in economic growth as well for 2024. Silver industrial demand should increase as the solar and battery-electric vehicle markets continue to grow. Battery-electric vehicle sales in the U.S. rose above a million in 2023. CarGurus predicts electric vehicles may command as much as 50% of new vehicle sales by 2030. That’s up from 8% in 2023. The low end of the prediction is 23% by 2030.

Investment demand is supported by ETFs with physical backing. They provide an easy mechanism for investment in silver and silver production companies. According to a recent Bank of America report, such ETFs and similar mechanisms hold approximately 88% of silver stored in Independent Precious Metal Authority (LBMA) facilities. That comes to around 748 million ounces of silver.

Technical Analysis: Targets $34.43 High for 2024

Although silver prices consolidated during 2023, the expectation for 2024 is a change from a consolidation environment to a trending environment. The bigger picture shows an initial breakout of a large bull flag in April 2023. Resistance was quickly realized however, leading to consolidation for much of the remainder of the year. Subsequently, the lower rising trend line was tested as support in October and prices reversed higher.

Recently, support was successfully tested at the top of the declining channel. In late-November of 2023 a breakout of a second and much smaller corrective channel triggered spiking volatility. What this shows is that prices are strengthening, which should lead to further increases in demand and therefore higher prices.

What generally follows consolidation of price compression is an expansion of prices or trending. Currently, three moving averages, the 20 (red), 50 (orange), and 200 (blue), on both the daily and weekly time frames, have converged. This behavior represents price compression.

The flag pattern was proceeded by a large sharp rally of $18.61 or 165.8% to a high of $29.83 in August 2020. That occurred in only 20 weeks. Calculating the measuring objective for the bull flag provides two potential targets. One at 40.60 and the other at 42.75. The first adds the dollar amount progressed in the pole to the flag to arrive at a target and the second is from a percentage calculation. However, if those targets are eventually reached, I don’t think it will happen in 2024.

My high target for silver in 2024 is $34.43. That price level completes an ABCD pattern extended by the 161.8% Fibonacci ratio, and it is close to the 61.8% retracement of the full downtrend in silver that starts from the 2011 high of $49.78.