Silver price predictions for 2017 have the white metal outperforming gold and climbing as high as 33% by year's end.
Nearly all of the 23 precious metals analysts polled in the London Bullion Market Association's annual survey have bullish silver price forecasts.
The LBMA asks each of the nearly two dozen participants for their high and low estimates for each precious metal.
The average high gold price prediction was for a 2017 increase of 11.2%. The average high silver price prediction was for a gain of 14.7%.
The average silver price forecast came in at $17.77, just below the current silver price of about $18 but 7.1% higher than the early January average $16.59 (LBMA measures its precious metals predictions against the early January price average.)
Using that early January benchmark, 20 out of the 23 analysts in the LBMA survey were bullish on the price of silver in 2017.
Here's what these experts think will have the most influence on silver prices in 2017...
Why These 2017 Silver Price Predictions Are Mostly Bullish
While generally positive, the analysts saw some risks to silver this year. Many of these risks it shares with gold - the threat of the U.S. Federal Reserve raising interest rates, a stronger dollar, and rising stock prices pulling money away from precious metals.
Another possible drag on the price of silver, several analysts said, could come from profit-taking by long-term holders of silver exchange-traded funds.
But overall the analysts surveyed by the LBMA see more reasons for silver prices to rise in 2017.
Related: The Essential Guide to Buying Gold & Silver
As with gold, widespread global uncertainty - from the Trump presidency to the rise of populism in Europe to the increasing unpredictability of countries like Russia, Iran, and North Korea - could launch a rally at any time.
Unlike gold, half of silver demand comes from industry. So silver prices could get a push from strengthening economies, which also will boost silver demand from the jewelry industry. And if President Trump follows through on his infrastructure spending plans, it will stimulate overall industrial commodity prices, also helping to lift silver prices.
One key to higher silver prices in 2017 could come from demand from the solar industry. Over the past decade, solar demand has soared from 1% of silver industrial use to 14%. Several analysts expect this trend to continue this year as more Chinese solar plants come on line.
Another common theme is that silver is underpriced vis-à-vis gold...
Silver Prices Have No Shortage of Catalysts
"At over 70, the gold/silver ratio is well above the long-term average, making silver relatively
cheap compared with gold," said Carsten Fritsch of Commerzbank AG (OTCMKTS: CRZBY).
Since 1970, the gold/silver ratio has averaged just over 55. If the ratio were to revert to 55, the price of silver would jump to about $22.50 - a 25% gain from today's silver price.
The most bullish silver price prediction came from William Adams of Metal Bulletin, who had an average 2017 silver price forecast of $20.20.
Philip Newman of Metals Focus had the top number of the high-end silver price predictions.
"Silver should record its 2017 high of $24 during Q4, helping to deliver a full-year average of $18.30, some 7% higher compared with 2016," Newman said. His high target of $24 represents a gain of 33% from today's silver prices.
Money Morning Resource Specialist Peter Krauth - who has 20 years of experience in the metals sector - thinks silver has a chance to get to $24 before midyear.
But it depends on whether this happens...
Why This Silver Price Forecast Says We'll Hit $24 by June
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Krauth said recent events in India could deliver a sudden jump in silver prices.
India shocked its citizens in November by declaring the two most popular denominations of its paper currency void. In the ensuing panic, gold prices in India shot up to nearly $2,000.
"There's been a rumor that people will flock to silver because the government might limit how much gold people can own," Krauth said in December. "If you get one of these wild-card factors, we could see silver reach maybe $24 as of Q2 onward."
But like the factors cited by the LBMA analysts, such an event would affect silver prices only in the near or medium term.
Silver also has several compelling long-term tailwinds.
One is the return of inflation. Bond yields spiked last fall, suggesting that an increase in inflation is in the pipeline.
"As we see inflation ramp up higher, then that mindset settles in," Krauth said. "People start thinking overnight that we're in an upward inflation cycle. When that mindset spreads, then people look for hedges."
But the strongest long-term catalyst for silver is the gap between supply and demand.
Silver demand has outstripped supply for four years in a row and will do so again in 2017, according to HSBC. The bank estimates a shortage of 132 million ounces, larger than 2016's 116 million ounce shortfall.
This is partly driven by a decline in mined silver, which HSBC projects will fall from 879 million ounces in 2016 to 874 million ounces this year. HSBC expects mining output to drop another 12 million ounces in 2018.
HSBC said higher-cost miners will want silver prices at $25 before investing in additional production.
Meanwhile, silver demand, as noted earlier, is rising. HSBC forecasts total demand increasing from 1.148 billion ounces last year to 1.159 billion ounces in 2017.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.