Silver will rise 30% in 2021 due to rebound in industrial demand

Although gold will continue to attract a lot of attention in 2021, as the price of gold is likely to hit record highs, analysts at Commerzbank recommend that investors pay close attention to silver.

The Bank’s "Precious Metals Outlook 2021 Report" released last week predicted that as the global economy improves and industrial demand for precious metals grows, silver will continue to outperform gold.

Commerzbank expects that the average silver price in 2021 will be approximately US$26.50 per ounce, and the price in the fourth quarter of 2021 will reach a peak of around US$32 per ounce, which is about 30% higher than the silver price of US$24.62 at the time of the report.

At the same time, Commerzbank expects the price of gold to rise to US$2,300 per ounce in the fourth quarter of next year, and the growth rate in the next 12 months will reach 24%.

According to the report, there are plenty of reasons to expect further increases in silver prices. The central bank's large-scale release may not only boost gold, but also silver. In addition, economic recovery should also stimulate industrial demand, so we expect silver to resume its upward trend.

Although industrial demand for precious metals is expected to rebound next year, Commerzbank said that investment demand will still be an important driving force for precious metal prices in 2021.

Commerzbank expects industrial demand to rebound in 2021, because factors that suppress economic growth this year may lose their influence. With the availability of effective vaccines on the market and the continuous advancement of public vaccination, the risk of further blockade and supply disruption should be greatly reduced. But mine production is also expected to return to normal, so these two effects may cancel each other out. Therefore, price trends may depend on other demand components to influence the trend of supply and demand balance.

One of the main variables for silver is that the new White House administration may promote the further development of renewable energy technologies.

According to the report, Biden hopes to adjust the US economy towards carbon neutrality and therefore hopes to promote the development of solar energy on a large scale. It is planned to build 500 million solar panels in the next five years. However, whether these plans can be implemented depends on the majority of the US Senate, which will hold elections in early January.

In Europe, the trend of climate-friendly energy is likely to continue and encourage further increases in solar power generation capacity.

Commerzbank pointed out that although silver is an important component of solar panels, actual usage has been declining.