Silver is attracting investor interest, with market analysts predicting
a potential leap to $40 per troy ounce in 2025. The metal
is rising in global investment portfolios, providing stiff competition to
gold’s long reign over commodity markets. Kar Yong Ang, a financial market
analyst at Octa Broker, explains why silver has a very good opportunity to
record significant growth this year.
Current Market Conditions and Silver’s
Performance in 2024
Silver prices increased by 18% in 2024, outpacing the more
modest increase of gold. The price was driven by inflationary pressures and
stronger industrial demand, particularly in renewable energy uses. While gold
is a classic safe-haven investment, silver’s dual role as both an investment and industrial metal gives
it a unique edge in volatile markets. Yet, risk management is crucial for
avoiding unnecessary losses.
There are two major silver market growth drivers:
●
Industrial
Demand: Silver’s use in renewable energy, particularly solar panels,
electronics, and EV manufacturing continues to expand, distinguishing it from gold, which
primarily serves investment and jewellery purposes.
●
Macroeconomic
Trends: While both silver and gold typically hedge against inflation, silver
price drops can be more significant compared to gold in times of economic
uncertainty. For example, during the COVID-19 crisis, silver experienced a significant negative return of –20.0%, while gold delivered a positive return of
5.1% in the same period.
Silver Price Forecasts for 2025: Can It
Surpass Gold?
Silver is
expected to outperform gold in the coming years, whereby limited supply will be
countered by increasing industrial demand. The price of silver can even reach
$40 per ounce sometime in 2025, given the robust demand. This growth potential
creates a nice buying opportunity for traders. Nevertheless, market liquidity
risks, rising interest rates, and changes in investors’ sentiments, among other
things, may affect the market negatively. What’s more, the asset is far more
sensitive to economic cycles compared to gold. In case a recession occurs,
silver may drop in price more steeply than gold. Traders should also monitor
the gold-silver ratio. If it’s too high, investors may simultaneously sell gold
and buy silver, assuming the ratio returns to its long-term average.
Those who consider opting for silver instead of gold should closely
analyse both assets and compare their investment risks, nature, and potential
profits. Here’s a brief overview of their pros and cons.
●
Liquidity
& Market Depth: While gold remains a more liquid asset, silver’s
increasing institutional interest is narrowing this gap, so the difference in
liquidity is minor.
●
Volatility
& Risk: While silver experiences greater price swings than gold, its
volatility presents significant profit-making opportunities for active traders
who practice strict risk management.
●
Portfolio
Diversification: Silver serves as both an inflation hedge and a
strategic asset tied to industrial demand.
Traders
can tap into the potential of both silver and gold using various trading
platforms. These days, the choice of a platform is not limited to MT4 and MT5,
and other solutions step up their offerings. For example, Octa broker’
proprietary trading ecosystem, OctaTrader, offers CFDs on silver and gold.
OctaTrader reports high trade volume for CFDs on gold this year despite the
slackened interest towards the metal after Donald Trump’s election win.
According to the Octa analysts, the demand for silver on OctaTrader is
currently quite high, leading to amplified liquidity and more profit
opportunities.
‘Silver’s long-term value is stable because of its underlying
supply-demand dynamics. The metal is widely used in electronics, renewable
energy, and medicine’, explains Kar Yong Ang. ‘The Silver Institute expects the total silver supply to increase by
3 percent and reach 1.05 ounces, an 11-year high. The demand is projected to
remain at 1.20 billion ounces this year. Considering this, the demand is likely
to outpace even the increasing supply. Although the demand for jewellery and
silverware is to decline, gains are expected in the consumer electronics market
and industrial fabrication. As a result, the deficit is likely to take place’,
he adds.
Silver’s strong market momentum, industrial
applications, especially for renewable energy and solar panels in particular,
and potential price appreciation make it an asset to watch in 2025. While
volatility remains a factor, strategic investments in silver may yield higher
returns compared to gold. Traders who aim to deal with the asset should address
it carefully.
Firstly, keep an eye on inflation trends, central bank
policies, and industrial demand to conduct fundamental analysis and identify
factors of potential price swings. To manage risks, balance your portfolio and
do not build an oversized position in any single asset. If your trading budget
is limited, especially after you diversify your investments, you can access an
increased balance through trading instruments like CFDs. Platforms like Octa
broker provide flexible CFD trading options for silver, allowing traders to
capitalise on short-term price movements.
Trading
involves risks and may not be suitable for all investors. Use your expertise
wisely and evaluate all associated risks before making an investment decision.
About Octa
Octa is an international broker that has been
providing online trading services worldwide since 2011. It offers
commission-free access to financial markets and a variety of services used by
clients from 180 countries who have opened more than 52 million trading
accounts. To help its clients reach their investment goals, Octa offers free
educational webinars, articles, and analytical tools.
The company
is involved in a comprehensive network of charitable and humanitarian
initiatives, including the improvement of educational infrastructure and
short-notice relief projects supporting local communities. Since its
foundation, Octa has won more than 90 awards, including the ‘Most Reliable
Broker Global 2024’ award from Global Forex Awards and the ‘Best Mobile Trading
Platform 2024’ award from Global Brand Magazine.
