The year 2024 saw silver prices soar to heights not witnessed since 2012, driven by a persistent deficit and growing interest from investors seeking safe-haven assets amidst geopolitical turmoil. The white metal peaked in October, breaching the US$34 per ounce mark, propelled by shifting post-pandemic dynamics and global tensions. However, following Donald Trump’s win in the US presidential election, bond yields and the dollar strengthened, putting pressure on silver and gold prices. As we look ahead to 2025, all eyes are on how Trump’s policies and decisions might impact the precious metals market alongside supply and demand trends. Let’s explore the silver forecast for 2025.
How Will Trump’s Presidency Impact Silver?
- Policy Implications: Speculation abounds about the impact of Trump’s upcoming presidency on the resource sector. His pro-business stance, especially toward oil and gas companies under the "drill, baby, drill" mantra, is seen positively by mining industry players for potential exploration and development projects. Trump’s pledge to expedite permitting processes for investments exceeding US$1 billion in the US could benefit domestic silver companies.
- Environmental Concerns: Despite potential benefits, Trump’s rollback of environmental commitments like the Paris Agreement raises concerns that may adversely affect the silver market. The Inflation Reduction Act, spearheaded by the current President Joe Biden, offers tax incentives for solar initiatives. Uncertainty looms over potential shifts under Elon Musk’s leadership and the impacts on the solar sector.
- Expert Opinions: Peter Krauth and Julia Khandoshko foresee contrasting impacts of Trump’s presidency on silver. While Tesla’s involvement in solar energy could offer stability, geopolitical and economic factors might hinder both supply and demand growth in 2025.
Silver Deficit Expected to Persist
- Industrial Demand: Notably, industrial sectors have been pivotal in driving silver demand, with projections putting industrial consumption at 702 million ounces in 2024. The energy transition, particularly in photovoltaics, has contributed significantly to this uptrend.
- Supply Challenges: Despite growing demand, mine production remains stagnant, with a mere 1% increase expected in 2024. To bridge the gap, companies have been tapping into existing inventories, thereby averting a significant spike in silver prices. However, experts anticipate continued supply-demand discrepancies in 2025.
- Global Impacts: Geopolitical tensions and macroeconomic uncertainties could constrain both silver demand and supply growth in the upcoming year. Economic downturns in key markets like Europe and China may dampen energy transition initiatives, posing challenges for the silver market.
Silver M&A Set to Expand in 2025
- Project Developments: As silver supply tightens, attention shifts to projects scaling up production. Notable expansions include Aya Gold and Silver’s Zgounder mine, Endeavour Silver’s Terronera mine, and Skeena Resources’ Eskay Creek project, poised to enhance silver output in the coming years.
- Market Prospects: Rising silver prices bode well for mergers and acquisitions in 2025, with mid-tier companies likely to explore consolidation opportunities. The exploration space is expected to witness increased activity as players seek to capitalize on improved valuations.
Investor Takeaway
Looking ahead to 2025, analysts project a potential pullback in silver prices before a resurgence. Despite fluctuating market conditions, silver is anticipated to surpass US$35, with a bullish outlook suggesting a climb beyond US$50. While macroeconomic risks remain, the silver market’s trajectory in 2025 underscores opportunities amid global uncertainties.
In conclusion, 2025 promises to be a transformative year for silver investors, marked by evolving geopolitical landscapes and economic realities. As stakeholders navigate market complexities, staying informed and adaptable will be crucial in seizing investment opportunities amidst prevailing uncertainties. Follow us @INN_Resource for real-time updates on the silver market.
