Silver has jumped to $42 an ounce, its highest level in 14 years, fueled by record-breaking gold prices and strong investment demand.
Following this surge, UBS has upgraded its forecasts for the metal, projecting that silver could reach all-time highs within the next year. The bank now expects silver to trade at $44 an ounce by the end of 2025 and climb to $47 by mid-2026, in line with its recent gold forecast upgrade.
“We flag that silver prices could reach an all-time high—a view that supports a long position in the metal or selling its downside risk for yield enhancement,” strategists Dominic Schnider and Wayne Gordon noted in a report.
The rally is taking place despite sluggish global industrial activity, as investors are drawn to silver by the same macroeconomic drivers propelling gold. UBS pointed to geopolitical tensions, U.S. fiscal deficits, slower economic growth, and the likelihood of Federal Reserve rate cuts as key factors behind demand.
Silver’s close correlation with gold, typically between 0.5 and 1.0, has amplified the price gains. Exchange-traded fund (ETF) inflows highlight this trend, with silver-backed ETFs adding more than 20 million ounces this quarter alone, bringing the total for the year near 80 million ounces. However, these holdings are still over 200 million ounces below the pandemic-era peak in 2021.
Looking ahead, UBS strategists expect silver to benefit further as monetary conditions ease and the market anticipates a cyclical recovery. They forecast the gold-silver ratio will decline toward 80, providing relative upside for silver.
At the same time, the strategists cautioned that silver remains highly volatile, roughly twice that of gold. Price corrections of 15% or more “can occur rapidly, even in a bull market,” they said, emphasizing that investors in silver need a high tolerance for risk.
The combination of lower interest rates, a softening global economy, and ongoing fiscal deficits is keeping investor interest in precious metals strong. UBS does not expect these conditions to reverse soon, suggesting sustained demand for silver in the near term.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.