2015 Silver Price Forecast

The 2015 silver price forecast is even more critical than past years', as the metal has toyed with a rebound for months...

While silver prices typically follow in gold's footsteps, silver has fared worse than gold recently. Gold is down 37% since it peaked at $1,900 in 2011. Silver has shed 67% since topping at $49 that same year.

It's down 12% in 2014 alone - compared to gold's 1% drop.

Now that gold is poised to hit the $1,400 to $1,500 range in 2015, the biggest question for investors is whether a silver rebound will follow...

Let's take a look at the main factors that will drive silver prices in the New Year...

The Biggest Silver Price Drivers for 2015

2015 silver price forecastOne of the most noteworthy things about silver in 2014 has been investor sentiment. Investors insist on staying exposed to the metal despite its price weakness.

An example of this is the iShares Silver Trust (NYSE Arca: SLV), the largest silver exchange-traded fund (ETF). Lower silver prices drive down SLV's unit prices, but shares outstanding have remained stable.

In fact, investors have maintained remarkable interest in SLV, given the wild price gyrations of silver over the past four years in particular.

In September, after a recent surge in holdings, SLV's outstanding shares leapt ahead of those of the largest U.S. gold ETF, the SPDR Gold Trust (NYSE Arca: GLD), by the widest margin ever. In November, retail investors pushed SLV's holdings up to 345 million ounces, the most in more than three years, according to The Wall Street Journal.

That means investors like to buy and hold their silver. They're very willing to hang onto both their physical holdings and ETF shares.

A second major driver for the silver price in 2015 is physical demand...

The U.S. Mint sold more American Eagle silver bullion coins last year than ever before, with 42.68 million delivered. But by Dec. 9 this year, coin buyers already shattered that record, with sales topping 43 million.

And continued strong sales are forecast for 2015.

While physical silver's current price is a bargain, it won't stay that low. All-in production costs are closer to $20 per ounce, making the current $16 spot price a money-losing proposition for producers. That means some production will come offline, either through mothballed mines or canceled projects. Less supply will force the price up to at least cost, plus an acceptable profit margin.

It could take a while, but markets work...

Now this third major driver for silver prices in 2015 is very telling...

The Gold/Silver Ratio in 2015

The gold/silver ratio shows how many ounces of silver are needed to buy one ounce of gold.

Since 2000, the gold/silver ratio has mostly traded between 45 and 80 and averaged about 55.

For the last three years, this ratio has been in a major uptrend, moving from a low around 48 to its current 75.

But 75 is very high. Odds are it's topping out, or about to do so soon. That means the gold/silver ratio will likely revert to its longer-term average and start trending back down to about the 62 level.

So if gold remains at its current $1,200, silver would rise to about $19.50. But as I discussed in my gold price forecast, I think gold will hit about $1,500 by next year's end.

A gold/silver ratio at 62 means $24 silver. That's a 50% climb from current prices.

And that's what I expect to see from silver in 2015. The metal will regain $20 and trade in the $20 to $25 range by the end of 2015.

The Best Ways to Buy Silver Right Now

Here are a couple of ways to take advantage of silver's low price while it lasts.

[epom key="ddec3ef33420ef7c9964a4695c349764" redirect="" sourceid="" imported="false"]

Coins: Because silver is so much cheaper than gold on a per-ounce basis, a single coin is within everyone's reach. Coins typically come in 1-oz. sizes. The Silver American Eagle (0.999 fineness) currently sells for about $19.50, and the Canadian Silver Maple Leaf (0.9999 fineness) sells for a similar price to its American counterpart.

Bars: Buying silver in bar form will get you more silver for your money. Silver bars are available in a number of sizes. Try to stick to recognized "Good Delivery List" bars, which will be easier to sell and bring top dollar should you do so. "Good Delivery" bars are produced by refiners such as Johnson Matthey, Heraeus, Engelhard, and the Royal Canadian Mint. Here are the current going prices: $18.50 for 1 oz., $90.50 for 5 oz., $190 for 10 oz., and $1,710 for a 100-oz. bar.

More on Precious Metals: 2015's gold outlook is the most anticipated in years. Is gold done consolidating? When will it regain its bullish trend? Here's a look at the two key factors that will drive gold prices in the new year...