2023-24 Silver Underperformance to Other Key Precious Metals Provides Clue about Its Potential Upside

Silver prices fell back from a 2-month high and closed slightly lower after weaker-than-expected U.S. economic reports on Jan. factory orders and Jan ISM services were generally bearish for industrial metals demand.

As April gold (GCJ4) closed +15.6 (+0.73%) higher on Tuesday, March 5, May silver futures (SIK24) still closed -0.007 (-0.03%) lower. In general, precious metals were mixed, with gold hitting a 3-month-high. While nearby COMEX gold futures were up 13.45% in 2023, silver futures added just 0.19%. So, silver greatly underperformed gold in 2023 and still underperforming the leading precious metals in 2024 giving us the basic idea about its potential upside momentum.

The silver to gold ratio provides few clues. In December 2023, the ratio of silver to gold was almost 87:1. For 2024, despite all the current transitory weakness, silver is capable of rising to 28 USD/oz, which looks like its first stronghold resistance level. More certainty going forward will depend on whether U.S. 10-Year Yields are to confirm a local top — some clues may be already shed in tonight’s, March 6, U.S. Fed Jerome Powell’s speech. Stated differently, TNX is the last obstacle for silver to move higher. Once silver moves to 28 USD/oz, it will propel quickly to the 32-36 area, a move which can occur some time in 1H 2024.