While gold is expected to perform well this year, with one firm predicting prices hitting $3,300 an ounce, investors are also being encouraged to pay attention to other metals.

Despite gold's expected success in 2025, Eric Strand, founder of the boutique precious metals firm AuAg Funds, anticipates that silver will perform even better. In his latest silver outlook, Strand said he expects silver to retest its 2011 all-time highs near $50 an ounce.

Strand’s bullish outlook comes as silver tests initial support near $32 an ounce. At the same time, silver continues to struggle to get out from under gold’s shadow, with the yellow metal trading near record highs above $2,800 an ounce. The gold/silver ratio (GSR) has declined from its one-year high but remains elevated above 88 points. The ratio’s long-term historical average is around 60 points.

“Currently, the GSR stands at a high 90:1, making silver particularly attractive as an investment,” Strand said. “Our short-term target for 2025 is for GSR to go towards 70:1, then gradually to 50:1, and then over several years, to 30:1. A GSR of 70:1, combined with a gold price of 3,000 – 3,300 USD, would give a silver price of 42 – 47 USD per troy ounce, which would be equivalent to an annual return of +45% and +62% respectively.”

Strand said he is bullish on silver this year due to its dual role as both a monetary and critical industrial metal.

Regarding its monetary role, Strand said silver is an attractive inflation hedge as governments, led by the U.S., continue deficit spending to support a struggling global economy.

“As we wrote in our Gold Outlook, the US, led by Trump, wants to avoid a ‘bust’ at all costs to create a positive ‘boom’ sentiment. The price to be paid for continuing stimulating the economy is monetary inflation,” he said in the report. “An inflationary boom creates an environment where commodity prices, including silver, surge. And it’s not just the U.S.—global debt levels are reaching new record highs. The money supply in the system is growing rapidly without any substantial growth being created, resulting in each monetary unit losing value, driving up the price of monetary metals like silver.”

Looking at silver’s industrial allure, Strand said demand for solar energy will continue to drive interest in the precious metal. Additionally, he noted that silver’s unique properties — being the most conductive metal for electricity and heat — make it a critical component in the high-tech evolution and electrification of the global economy.

At the same time, the supply of silver has not kept pace with insatiable market demand.

“After several years of deficit in supply relative to demand, we are facing a situation that will have a major impact on the price of silver. A physical shortage could trigger a price surge, potentially doubling silver’s value in a short period,” Strand said. “In addition, demand is inelastic, as we will not consume less silver regardless of price increases. This is due to silver’s irreplaceable properties and the fact that the amount of silver used per product is relatively small, meaning price surges rarely impact the final product's cost significantly.”

Courtesy: Kitco