Silver (XAGUSD) has already gained 50% year-to-date, although Citi (C) expects plenty more upside for the shiny metal. The firm expects silver to reach $150 per troy ounce within three months, signaling upside of 39% from current levels. Citi’s previous zero-to-three-month price target of $100, set just two weeks ago when silver was around $85, has already been surpassed.
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“Silver is behaving like ‘gold squared’ or ‘gold on steroids’,” wrote analysts at Citi on Tuesday. “And we think this likely continues until silver looks expensive by historical standards, relative to gold.”
Why Is Silver Rallying?
Citi believes that lower interest rates, risks to Fed independence, demand from China, and elevated geopolitical tensions could help drive silver even higher.
Comparing silver to gold, Citi’s Global Head of Commodities Research, Max Layton, noted that silver could rise to as high as $170 if the ratio of gold prices to silver reverts to the 2011 low of 32x. He added that if silver were to revisit its post-Bretton Woods low of 14x in 1979, it would imply a price range in the mid-to-high $300s, although this scenario is “extremely unlikely.”