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Silver had a spectacular Q2-2020 as it jumped some 33 percent over the previous three months to trade at just over $18.70/oz. Strategists at TD Securities forecast the white metal at $22.25 by end-2021. 

Key quotes

“As both investment and industrial demand are expected to rise, at a time mines will function at below operational capacity due to social distancing policies, the market for silver is projected to tighten. This will drive the sector to operate at full or even above full utilization, where the relationship between prices required to incentivize an incremental unit of supply is relatively inelastic and with convex characteristics.”

“Silver should trend towards the marginal cost of a unit of silver around $22.25/oz by late 2021.”

“The industry is now set to operate at the very top of the supply cost curve, where the relationship between prices required to incentivize an incremental unit of supply is relatively inelastic and with convex characteristics. In fact, prices may move beyond the possibility frontier, as even a modest increase in demand will outpace supply growth. As inventory flows remain constrained, this environment could send prices far beyond our projections.”