Raymond James hikes silver price forecast; Jeffrey Christian sees ‘extremely hostile’ environment

Raymond James has raised its average silver price forecasts for 2021 to US$25 per oz., up 37.9% from its previous estimate, and to US$22.50 per oz. in 2022, a 25% increase.

For the remainder of this year, the financial services firm forecasts an average silver price of US$25 per oz. in the third quarter and US$26 per oz. in the fourth quarter, for a full-year average of US$21.07 per ounce.

“Our price forecast changes reflect our views that the significant increase in monetary stimulus and Central Banker indications that interest rates are expected to be lower-for-longer have created a macroeconomic back drop that supports increased investment demand for gold, driving prices higher,” the Raymond James analysts wrote in a research note.

The brokerage firm uses a model that estimates silver prices based on its ratio to gold prices. Therefore, an increase in gold prices translates to an increase in silver prices.

Currently, its model uses an 85:1 gold to silver ratio to estimate silver prices, and an 80:1 ratio for estimating silver prices in 2021, 2022, and for its longer-term silver price forecasts.

In 2019, the average gold to silver price was 87:1, rising to the 100:1 mark in May, which, revealed a “wider-than-ever margin between the precious metals and signals a potential reset in the months to come,” Raymond James reported in May.

Jeffrey Christian, managing director of CPM Group, a New York-based commodities research and consulting company, expects silver to trade at an average price of between US$20 per oz. and US$35 per oz. over the next three to four months.

“This is an enormous range and reflects the expectation of volatile economic, political, societal, and public health trends over this time,” he said in an email.

Over the next couple of years, Christian forecasts average silver prices of between US$18 per oz. and US$34 per ounce.

“The increase in silver price forecasts are the result of investment demand for the physical metal and is driven and determined by investors’ views of their political and economic environment,” he wrote.

Christian said his silver price forecasts are driven by “the economic and political environment for most people in the world,” which he believes, “will be extremely hostile both in the near term and for years to come.”