(Kitco News) - Investor demand has driven gold prices to record highs above $3,600 an ounce, but it's not the only precious metal attracting attention in the marketplace. One major bank says silver’s momentum could ultimately push prices to record highs above $50 an ounce.
In a note on Friday, Daniel Ghali, Senior Commodity Strategist at TD Securities, warned investors that silver appears to be entering the endgame of the current cycle as demand—now driven by renewed investor interest—eats away at the last dregs of above-ground stockpiles.
In an interview with Kitco News, Ghali said that free-floating stockpiles in the vaults of the London Bullion Market Association (LBMA) could run dry within seven months.
“If investment demand picks up, as we have seen happen in previous easing cycles, stockpiles could be depleted within four months,” he said. “The drain in global inventories persists amid years of structural deficits, exacerbated by megathemes that should continue to attract capital into precious metal ETFs.”
The Canadian bank has been bullish on silver since April 2024, when it first noted that LBMA silver stockpiles were being squeezed by robust industrial demand.
According to the Silver Institute's 2025 forecast, the global silver market is expected to remain in a supply deficit for the fifth consecutive year, totaling 117.6 million ounces.
In its official forecast, TD Securities sees silver prices averaging around $37.50 an ounce in the fourth quarter. However, prices are currently well above analyst targets. Spot silver last traded at $41.24 an ounce, up 0.76% on the day, and silver prices are currently at their highest level in 14 years. Analysts note that the only major resistance left is the all-time high at $50.
“From a historical perspective, when we see this kind of melt-up, it’s difficult to determine what prices can do. I think we could easily see $50 an ounce in the next couple of months,” Ghali said. “With the current momentum, that is how prices are tracking.”
Investor interest in silver has picked up in recent weeks as markets have started aggressively pricing in renewed easing from the Federal Reserve. According to the CME FedWatch Tool, markets now see nearly a 10% chance of a 50-basis-point cut later this month—a scenario that wasn’t priced in a week ago.
As for what it will take to cool down silver prices, Ghali said that there needs to be a rebalance in the market’s fundamental supply and demand dynamics. He noted that a potential recession, coupled with higher silver prices, would be required to rebalance the global market.
However, he added that he doesn’t know what that scenario would look like. It would have to be a severe recession to dampen industrial demand given silver’s critical role in key segments of the global economy, including the evolving green energy transition.
At the same time, he said silver prices might have to be significantly higher to attract new supply.
“Historically, if you are expecting to see a market rebalance from a price perspective, that strike is often much higher than people expect it to be,” he said.
Although TD Securities remains extremely bullish on silver, Ghali said that it could have a tough time outperforming gold in the current environment. He explained that gold may continue to lead as central bank demand remains a key pillar of support for the yellow metal.
Although silver prices are up 43% so far this year, gold has kept relatively close pace. The gold/silver ratio remains well above historical averages, currently trading just below 88 points.
