Citigroup analysts anticipate spot silver prices will reach a record $US150 an ounce within the next three months. This forecast follows a substantial rally in January, during which the metal’s value increased by nearly 50 per cent. The bank’s analysts, including Max Layton, believe strong buying activity will persist in China, necessitating higher prices to incentivise current holders to sell their silver. Citigroup is a global financial services company that provides a wide range of banking and investment services to individuals, corporations, and governments. Its operations span across various regions and sectors within the financial industry.
The analysts noted silver’s performance, describing it as “gold squared” or “gold on steroids.” They suggest this trend will likely continue until silver’s price appears high relative to gold based on historical standards. Silver recently hit a new record of $US117.71 after experiencing a 14 per cent increase, marking its largest intraday rise since the 2008 global financial crisis. This rally has been fuelled by robust physical demand and speculative interest within the relatively less liquid market, with indications suggesting that Chinese buyers are spearheading the movement.
According to Citi analysts, a return to the 2011 low of 32 to 1 in the ratio of gold prices to silver could potentially drive silver prices as high as $US170 an ounce. These price increases have occurred despite several bearish factors, including outflows from silver-backed exchange-traded funds, selling by speculators in futures markets, and declining inventories in US warehouses. These factors have bolstered availability in other markets.
Despite these bearish influences, the rapid pace and volatility of silver’s rally since December have raised concerns among traders and analysts. The sustainability of this surge remains a key point of discussion within the financial community, as experts closely monitor market dynamics and investor behaviour.
