Silver, Copper Rise Amid Tight Supply

Copper and silver prices are on the rise in 2023 due to insufficient supply against growing demand. Some analysts see these precious metals enjoying moderate-to-outsize gains this year. Here’s the scoop behind rising prices – and how to invest if you’re looking to capitalize on these shiny metals.

  • Insufficient supplies could drive the silver price per ounce to a nine-year, $30 high
  • Meanwhile, the price of copper per pound has risen as supply disruptions and China’s economic reawakening reduce global supplies

Silver price per ounce on the rise

Silver futures rose from $23.42 on January 5 to $23.94 by January 20, a modest increase for the shimmery metal. But a CNBC report found that some analysts see the silver price per ounce hitting $30 in 2023. If so, that would be silver’s highest price in nine years since it eclipsed the same in February 2013.

Janie Simpson, managing director at ABC Bullion, told CNBC that silver has often seen near 20% gains in high-inflation years. “Given that track record,” she said, “…it wouldn’t surprise to see silver head towards $30 per ounce this year, though that will likely offer significant resistance.”

Randy Smallwood, president of Wheaton Precious Metals, agrees that $30 will prove hard to top. Still, he sees prices staying “comfortably over $20 per ounce.”

Other analysts predict that recession fears and declining inflation could soften industrial demand, which may the silver price per ounce to $18.

Why is silver climbing?

Analysts attribute low silver supplies and its tendency to outperform gold in high-inflation environments to the metal’s early-year success. According to The Silver Institute, mines produced 843.2 million ounces of silver in 2022. That’s a not-insubstantial drop from 2016’s 900 million ounces.

Because silver is often a byproduct of mining for other metals, it’s harder to increase production to meet demand. Increased need in the automotive, electronics and renewable energy tech industries may also contribute to growing demand.

Copper price per pound jumps in January

The copper price per pound has also bumped up in January, from $3.74 on January 4 to $4.25 on January 20. Here, too, analysts point to supply and demand issues driving higher prices.

A recent Goldman Sachs commodities forecast suggests that copper will average around $4.42 per pound in 2023. Those numbers could reach as high as $5.54 next year. They blame supply woes, mine disruptions and declining capital expenditures on mining firms for rising metal prices.

John E. Gross of metals management consulting firm John E Gross Consulting blamed issues at South American mines in particular.

While protests in Peru have derailed production at two sites in the country, a contract dispute in Panama threatens to slash 300,000 metric tons from the global supply.

And in Chile, declining ore grades, water shortages and maintenance issues have reduced copper output.

But declining supply is just one half of the equation. As China loosens many of its “zero Covid” policy restrictions, increasing industrial activity piles more demand onto the global pool.

Copper and silver ETFs

Precious metals ETFs may buy and hold physical commodities, trade precious metals futures or hold stocks in related companies.

Generally, copper and silver ETFs aren’t expected to outperform – they’re used as a diverse, liquid hedge against inflation or market turmoil. You can use ETFs to sidestep risks of theft and illiquidity (for physical metals) or concentrated volatility (for metals and stocks).

Still, there are no guarantees that these investments will perform, or that their prices won’t be swayed by supply and demand changes.

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