CIBC analysts are slightly more bullish, citing continued low interest rates and elevated government debt as “supportive of further significant price appreciation. CIBC has set a $32 price target over the next year.
The U.S. election outcome isn’t murky anymore, with Biden set to be inaugurated in January. But the economic recovery is far less clear, especially with new business restrictions in parts of the world where new coronavirus cases are surging.
Silver started the year at about $18 an ounce but tumbled to an 11-year low of $11.74 in March. By Aug. 6, it was back in the $20s and currently trades around $23. A $32 price target implies a 39% gain.
Citigroup analysts are even more bullish, with a $40 price target on silver over the next 12 months, driven by investor desire for safety as well as industrial demand once the recovery picks up. They see a return of the 2010-11 bull market in silver as demand rises 6% in China, from both industrial buyers and retail investors.
Chinese consumer spending should support higher jewelry and silverware demand given the holiday season and future celebrations like weddings. Citi estimates 12% growth next year on demand for jewelry and silverware.
Silver is also used in 5G network equipment, and the expansion of 5G networks will be a major driver of electronics silver demand over the next two years. “The rapid development of 5G network infrastructure and rising demand for high-speed internet access should become the new pillars” supporting the network upgrade and boosting silver, Citi analysts say.
Silver is also widely used in electric vehicles, from semiconductors to harnesses and displays. Pure battery-powered electric vehicles require more electrical control, which boosts their relative silver consumption.
