Silver Price Eyes $40 Despite Near-Term Volatility, Tariff Uncertainty Lingers – Ole Hansen
The comments below are an edited and abridged synopsis of an article by Neils Christensen
The silver price has been facing strong resistance at $34 an ounce, but experts like Ole Hansen, Head of Commodity Strategy at Saxo Bank, predict that silver’s time will come, potentially later this year. After encountering resistance once again, silver has pulled back, now testing support around $33 an ounce. This pullback is largely driven by the uncertainty surrounding President Donald Trump’s proposed global tariffs. While Trump’s tariff policies remain a significant point of contention, recent reports suggest that the US may implement more targeted tariffs, which could reduce the risk of a full-scale global trade war.
In an interview with Kitco News, Hansen explained that growing demand for silver in the US has been a key factor in pushing up the price. With fears of US tariffs impacting silver, bullion banks in New York have increased their silver stockpiles. Despite these uncertainties, Hansen believes that silver is unlikely to be significantly impacted by tariffs, as the US relies heavily on silver imports. Mines in the US produced over 1,100 tonnes of silver last year, but demand exceeded 5,100 tonnes. Consequently, the US imports most of its silver from countries like Mexico, with Canada supplying around 10%.
While tariff uncertainty continues to impact silver in the short term, Hansen sees silver testing lower levels before a potential rally. He expects it to reach $40 an ounce by the end of the year, driven by strong industrial demand and a significant supply deficit. Hansen highlighted that about 55% of silver demand is industrial, particularly in sectors like electronics and solar energy, which continue to see growth despite global decarbonization challenges.
Moreover, Hansen believes that silver will benefit from a rally in gold. With the yellow metal remaining above $3,000 an ounce, Hansen predicts that it could climb to $3,300 an ounce this year, potentially pulling silver along. If the gold:silver ratio returns to the levels seen last year, silver could rise significantly, possibly surpassing $40 an ounce.
However, Hansen cautions that the silver market is highly volatile, likening it to “gold on steroids,” with sharp fluctuations in price. Although silver’s long-term outlook remains positive, short-term price swings are likely to persist.
In conclusion, while silver is experiencing volatility, the fundamentals suggest a positive trajectory. With continued industrial demand, a growing supply deficit, and the potential for gold’s influence, silver may well exceed $40 an ounce as the year progresses, making any dips in price valuable buying opportunities.
