ASX silver shares are back in the spotlight as the demand for precious metals like silver and gold surges.
With central banks poised to start their interest rate-cutting cycle around the world (the European Central Bank already has), many investors are piling into these metals, expecting a breakout rally.
And whilst the 'golden child' of the gold/silver pairing usually steals the limelight, experts believe the stage has been set for a breakout in silver prices.
Could this be the perfect moment to add ASX silver shares to your portfolio? Let's see.
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Why are silver prices surging?
Gold has taken off in 2024 and posted a series of new all-time highs in the process.
But silver has outperformed gold recently, rising over 29% this year in USD terms to trade at US$30.73 per ounce at the time of writing. This could draw attention to ASX silver shares.
Whereas gold's recent demand spike is fuelled by global central bank buying and increased potential concerns about the economy and inflation, silver's dual role as a precious and industrial metal makes it a unique investment.
Not only does silver benefit from the same safe-haven demand that drives gold higher, but its industrial uses – particularly in solar panels and electronics – are boosting demand even further.
In a recent note, Citi analysts predicted silver prices could surge 15% this year to US$35 an ounce and climb to US$38 an ounce by mid-2025, according to The Australian Financial Review.
The broker says several forces are combining to form the rally. As the US Federal Reserve prepares to cut interest rates, precious metals like silver become more attractive.
Rate cuts typically reduce the allure of income-generating assets like bonds. This shifts investors' focus to assets like gold and silver, which can hold value during economic uncertainty. This could also impact ASX silver shares.
But silver has roles outside of its investment status. It also plays a significant role in the solar energy sector. It is used in the production and operation of solar panels.
According to The Silver Institute, silver is "the world's best conductor" of electricity, even better than copper.
Meanwhile, The International Energy Agency (IEA) suggests that installations of solar energy systems are expected to more than double by 2028 globally.
This demand could be a major tailwind for companies with exposure to the metal.
What's the outlook for silver shares?
In the table below is a list of three companies with concentrate operations in the exploration and/or production of silver.
| Company name | Market cap |
| Adriatic Metals PLC (ASX: ADT) | $1.06 billion |
| Silver Mines Ltd (ASX: SVL) | $158.3 billion |
| Investigator Resources Ltd (ASX: IVR) | $61.9 million |
Consensus has a strong buy rating on Adriatic Metals according to CommSec. Whereas the other two aren't rated.
But analysts from Goldman Sachs, UBS, and Citi are all bullish on gold and silver., and this could impact ASX silver shares.
Goldman forecasts gold to hit US$2,700 an ounce by early next year. Given silver often follows gold's lead, this trend could further support silver's rise.
Meanwhile, UBS predicts silver prices to continue rising into next year:
We see silver prices rising to USD38/oz by mid-2025, with industrial demand likely to benefit from higher use in renewables and electronics.
Citi, on the other hand, said, "the time is right" to start looking at the precious metal.
Add to this the fact that silver is in a supply deficit, and you have a recipe for a major price surge, according to Tavi Cost, macro strategist at Crescat Capital. He commented on this in a post from June this year:
Silver production in Peru continues to fall severely, now down 43% from peak levels.
Together with China, Peru is projected to be the second-largest producer of silver globally.
Limited new supply paired with structurally higher demand is the perfect recipe for major price surges in any commodity.
ASX silver shares takeaway
Given the current market dynamics, experts say ASX silver shares might present a compelling opportunity.
Time will tell how the investment thesis plays out.
