Four Reasons Silver Soars in 2024

Silver has had a strong 2024 so far, with prices up 23% as the precious metal approaches $30/oz.

But history says that the "white metal" could rally much farther in the rest of 2024 and beyond, as advances in three revolutionary technologies will transform billions of lives—while supercharging silver demand.

As you'll see below, one of the reasons for a surge in silver price is mathematical. One is historical, and the third is technological. Finally, there's one big speculative reason that silver could soar this year—triggering a rally that goes much faster and farther than almost anyone imagines.

Silver Catalyst #1: A Gold/Silver Ratio that's Out of Whack

The gold/silver price ratio today is abnormally high at 84.4—meaning that it takes 84.4 ounces of silver to equal the value of one ounce of gold.

Historically, the average gold/silver ratio has been around 30:1. This implies that silver is quite undervalued relative to gold, even despite silver's rally year-to-date.

For the gold/silver ratio to be restored to its historical average, silver would have to soar by more than 100%, or gold prices would have to plummet.

With central bankers continuing to buy gold by the hundreds of tonnes, a collapse in gold prices seems unlikely.

Therefore, history says silver prices should soar over the next few months, as the traditional gold/silver ratio is restored.

Silver Catalyst #2: Rising Industrial Demand

The 30:1 historical ratio isn't an iron law, of course. But when actual laws concerning silver and gold were passed, the official ratio has been much closer to parity,

In Ancient Rome, the price ratio was set to 12:1. In 1972, the U.S. government made it 15:1. A similar ratio was capped in France at the time.

This ratio made some sense since the ratio of silver to gold in the Earth's crust is something like 17.5-to-1.

But above ground, it's a different story.

In the year 1900, 12 billion ounces of silver were circulating the world. Today, the number is 2.2 billion ounces, according to CPM Group.

How are there almost 10 billion fewer ounces of silver in circulation today, despite 124 years of mining and new mining and drilling technologies?

The answer has to do with silver's usefulness as an industrial metal. More than 90% of the silver that has ever been mined has been used by the global tech, photography, defense, and electronic industries.

For comparison, only 10-15% of gold is used for industrial purposes, with the rest going to jewelry or investment.

2022 was a record year for industrial consumption of silver—until 2023's demand surpassed it, with 654.4 million ounces consumed.

All told, silver demand has exceeded supply for three consecutive years now, with an average annual deficit of 184.3 million ounces.

And this surge in industrial demand isn't slowing down—in fact, it's speeding up thanks to…

Silver Catalyst #3: The Rise of Electric Vehicles, Solar Power, and AI

Pure silver is the most conductive of all metals. It's highly malleable, resistant to corrosion, and doesn't oxidize easily. These properties make it useful for batteries, LED chips, semiconductors, solar panels, photography, nuclear reactors, electric vehicles, and more.

The automotive industry consumes about 80 million ounces of silver a year—and because electric vehicles require nearly double the silver of combustion engines, that figure is forecast to rise to 90 million ounces by 2025 as more electric cars hit the road. As vehicles become fully autonomous, their dramatically increased complexity will require even more silver consumption.

New data centers to meet growing AI capabilities will also boost silver industrial demand, as silver is necessary in semiconductors.

According to The Silver Institute, demand for silver in 5G technology, the Internet of Things, and semiconductors will rise by 200% to 23 million ounces by 2030.

These technological trends all strongly point to silver demand surging—not slowing—in the years ahead.

And then there's always the chance of a catalyst not seen since 1997.

Silver Catalyst # 4: A New Silver Billionaire?

Thomas Kaplan credits Warren Buffett with making him a billionaire.

In 1997, Buffett bought 3.500 tonnes of silver, in a move that was seen as a surprise masterstroke.

At the time, silver prices were languishing at under $10/oz as it reeled from the Hunt brothers' efforts to corner the market and the resulting bubble and burst.

"But by the grace of God," Kaplan said, "it became public he had done this the week I was taking my silver company public."

Buffett's big purchase, which netted Berkshire $97 million in profits, was all the more notable because he's publicly derided gold as an investment.

But in his annual letter, he explained his thinking.

"In recent years, bullion inventories have fallen materially, and Charlie (Munger) and I concluded that a higher price would be needed to establish equilibrium between supply and demand."

Buffett could say the exact same thing about silver today… and the day that he or another major market mover announces another silver investment, it could spark a rally much faster than even silver's fundamentals would predict.

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