The silver market is experiencing some extreme price movement as investors, especially those on Reddit, have not created the lasting short-squeeze in the marketplace they were hoping for; but one bank sees high potential for the metal.
In a Tuesday report, Michael Widmer, who is the PM analyst over at Bank of America, claimed that he is staying bullish on silver, anticipating that prices could rise to $35 with the possibility of going to all-time highs around $50 per ounce.
Widmer also said that the recent failed rally above $30 per ounce is concerning for the market in the close-term. However, he added that the market continues to be supported by strong financials. His words come as silver gave up all of Monday’s increases. March silver futures last exchanged hands at $26.77 per ounce, lower 9% on the day.
“The speed of this rally is what is worrying, with markets like China trading at large discounts now,” he said. “While we are staying bullish on the underlying numbers, this is worth watching because lower commercial buying in the end means that a rally might come to an abrupt stop.”
While the market has seen lots of volatility this past week, Widmer stated that this action is not outside of norms.
“Many of the metrics have stayed inside of recent levels, showing that dislocations have been managed. In particular, investor events do not appear to have disrupted much,” he said.
Looking past the volatility, Widmer said he is bullish on silver as the fundamental numbers of supply and demand support an increase in price. He stressed that stockpiles in silver have lowered and the market is pretty much balanced as producers have cut production recently.
For the supply side, Widmer predicted silver to get a major increase this year as President Biden moves toward new policies on creating new green tech.
He said that solar demand has gone up as Biden pushed to lower emissions to zero by the year 2035.
“To do that, electricity production would probably need to be overhauled, possibly through an investment in solar technology. Under our base-level prediction, we see a silver deficit this year, a shortfall that will continue during Biden’s plan,” he said.