UBS has stated that silver is poised to continue tracking gold's upward trajectory, benefiting from the same factors that have been supporting gold prices, including fiscal concerns, long-term risks to the US dollar's purchasing power, and expectations of a shift toward more accommodative monetary policy in the medium term. The bank's strategist, Dominic Schnider, points out that the correlation between silver and gold has recently climbed to multi-year highs. Despite silver's notable industrial characteristics, its recent price action suggests it is trading more like a "high-beta version of gold," exhibiting greater price elasticity during precious metal rallies.
UBS projects that silver prices will rise to $70 per ounce by December 2026, advance further to $75 in March and June of 2027, and ultimately reach $80 by September 2027. In comparison, the spot price of silver was approximately $66.5 per ounce as of September 18. In the near term, a more hawkish Federal Reserve stance and the possibility of further rate hikes could still exert pressure on silver.
However, UBS believes that as long as gold prices maintain their strength, alongside stable investment and industrial demand, the medium-to-long-term upward trend for silver remains supported. On the industrial demand front, while high silver prices are prompting the photovoltaic industry to reduce silver usage per unit, employing material substitutions and technological improvements to curb consumption, UBS contends that this pressure could be partially offset by emerging demand from other sectors. Expansion in data centers, artificial intelligence infrastructure, grid investments, and electric vehicles is expected to continue driving silver consumption.
Meanwhile, silver supply growth remains relatively constrained. The majority of global silver is not derived from dedicated silver mines but rather as a byproduct of lead, zinc, copper, and gold mining operations. Consequently, even with rising silver prices, miners face difficulties in rapidly expanding silver production, limiting the supply response to price increases. Regarding precious metals relative valuation, UBS sees limited scope for the gold-to-silver ratio to sustain a rise above 70 times. The bank prefers to gradually build positions on silver price pullbacks rather than chasing short-term rapid gains.
On the risk front, UBS warns that more hawkish monetary policy, a significant deterioration in the global economy, and an unexpected decline in industrial demand could all weaken silver's upward momentum. Nevertheless, over the medium term, the bank still views the balance of risks as leaning toward higher silver prices.