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Factors Affecting the Silver Market in 2023

Everyone expected 2022 to be a year of post-Covid recovery. However, the year has been fraught with uncertainty and conflict. Tensions over the Russo-Ukraine war have spilled over to the energy and commodity markets, and the west has been hit with unexpected and continual inflation hikes. Furthermore, 2022 saw a shift in Central Bank policies which have included a number of interest rate hikes that were issued in an unsuccessful effort to combat inflation. Standing here today, near zero inflation rates seem to be something of the past. Today, investors are becoming used to recurrent interest rate hikes and, at least in the US, the policy rate is almost back to levels not seen since the 2007 financial crisis.

In 2022 the silver price saw an overall reduction in price of about 15%. Gold and platinum prices also fell by 8%. Precious metals price indexes were projected to fall by approximately 4% in 2022. The projection is the same for 2023. This is because of concerns over a reduction in industrial production caused by a potential worldwide recession.

Nevertheless, central banks worldwide have continued to build up their precious metals reserves, and particularly gold. Uncertainty over the dollar's future as the currency of the petro trade has motivated many western countries to focus on gold as a necessary financial reserve.

Silver's price decrease in 2022 was primarily caused by reduced industrial production and demand worldwide, caused by economic conditions and economic recovery relating to Covid. Most of silver's demand is for industrial use. This include solar panels, medical technology, and electronics. While production of goods that require silver significantly reduced in 2022, it is unlikely that 2023 will see the same demand drop. In fact, a contstant increase in demand for silver from green and solar energy sectors is likely to support the metal's price in 2023. 

What to Expect

2022 ended with a 3% rise in the silver price from its initial price of 2022. This was mostly caused by the Russian invasion of Ukraine. Additionally, recession concerns and western sanctions on Russia, the world's largest silver supplier, also impacted the metal's price. 

In 2023, the expectations for silver show a positive trend. Primarily because of the inflation expectations, gold’s market value, the US dollar market, and the supply and demand as a whole. At the beginning of 2023, the price started at $24.18, and currently, the price is $24.41 which means that the price is already showing a positive trend. The forecasted silver price in 2023 is $34.17. This indicates a year change of +41%.

What Will Affect the Silver Price in 2023?

There are a number of factors that are expected to contribute to the price of silver in the coming year. These include the following: 

  • The Price of Gold

There has always been a positive price relationship between gold and silver. When the price of gold rises, the price of silver usually rises as well. The predictions for the gold price are positive for the upcoming year. Gold's proportional relationship with silver is likely to move the price of silver up with it. 

  • Inflation Expectations

Increases in inflation frequently push commodity prices up. In 2023, there is a high chance that inflation will continue to rise, as it has in 2023. This is likely to strengthen the silver price.

  • Supply and Demand

Silver is a precious metal that has huge demand across numerous industries. Increased demand for industrial uses of silver could impact the metal's supply, which in turn would push the price of silver higher. Silver supplies, due in part to the war in Ukraine and Russian sanctions, is expected to face a shortage in 2023. And whenever there is a shortage of commodities in the market, the prices rise.

Is Silver a good investment?

Silver has seen a recent reduction in its price. Furthermore, that price is expected to increase in 2023. These two factors together would indicate that now would be a good time to invest in silver. has a wide range of silver bars and coins to suit any investor's portfolio. 

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