Citigroup forecasts that the spot silver price will reach a historic high of $150 per ounce within three months, extending its monumental rally which has already surged nearly 50% since January.
Analysts at the bank, including Max Layton, believe that China's robust buying momentum will persist, suggesting that even higher prices will be necessary to incentivize current holders to sell.
"Silver is behaving like 'gold squared' or 'gold on stimulants,'" the analysts wrote in a report on Tuesday. "We believe this dynamic is likely to continue until silver appears expensive relative to gold by historical standards."
The silver price soared to a new record of $117.71 per ounce on Monday after a staggering intraday jump of up to 14%, marking its largest single-day gain since the 2008 global financial crisis. This surge is underpinned by strong physical demand and speculative interest in a relatively illiquid market, with indications that Chinese buyers are leading the charge.
Citigroup analysts stated that if the gold-to-silver ratio were to revert to its 2011 low of 32:1, it would imply a potential silver price as high as $170 per ounce.
The bank added that silver's price ascent has occurred despite facing a series of headwinds, including outflows from silver-backed exchange-traded funds (ETFs), selling by speculators in the futures market, and declining inventories in U.S. warehouses, which increases supply elsewhere.
However, the extraordinary speed and volatility of the silver rally since last December have raised significant concerns among many traders and analysts.
"History suggests this rally is closer to its end than its beginning," wrote Marc Loeffert, a trader at Heraeus Precious Metals, in a report. "The gold/silver ratio has been below current levels several times in the past, but rarely has it experienced such massive swings in such a short period."
In a Tuesday report, Ole Hansen, Head of Commodity Strategy at Saxo Bank, suggested that speculative momentum could drive the gold price to $5,500 per ounce, noting that the structural bullish logic remains intact. "We believe investors seeking a strategic allocation to hard assets are better off sticking with gold, as fundamental demand from central banks should continue to protect it from a major correction."
He issued a warning, however: in contrast, silver has "clearly entered bubble territory," with retail participation, speculative positioning, and fear of missing out driving it to historically expensive levels. This could severely damage industrial demand and trigger disorderly market volatility.
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