Citigroup argues that silver is not a "shadow" of gold but rather its "square term," noting that the premium of Shanghai silver over London prices has significantly climbed and remains at historically high levels, while Indian silver premiums have also seen a rare recent rebound. Assuming a gold price range of $5,100–$5,400 per ounce, Citi has raised its 0–3 month silver price target to $150 per ounce.
Amid the boiling precious metals market, Citi has maximized its short-term outlook for silver.
According to the trading desk, on January 27, Citi Research significantly raised its 0–3 month silver price target from $100 per ounce to $150 per ounce in its latest "MetalMatters" report. This new target comes just two weeks after the initial $100 forecast was issued, as silver prices have rapidly broken through the $110 mark.
Citi states directly that, at this stage, silver's performance is no longer merely "following gold," but resembles more closely "gold on steroids."
From being a "precious metal" to a "capital allocation asset," silver is replicating gold's pricing logic.
Citi believes the core driver of the current silver rally is not traditional industrial demand or supply constraints, but the full activation of capital allocation logic.
Similar to gold, silver is increasingly viewed by global capital as: an asset to hedge macroeconomic uncertainty, a tool to hedge geopolitical risks, and a vehicle to price the risk of "compromised Federal Reserve independence."
However, unlike gold, silver possesses higher elasticity and stronger price acceleration.
Over the past two weeks, gold prices rose approximately 10%, while silver surged over 30%. Citi vividly describes this as: silver is not gold's "shadow," but its "square term."
The "engine" of this silver bull market: China leads, India follows.
Citi explicitly points out that the "doubling" price surge since December exhibits distinct geographical characteristics: China is the dominant force, with India and global retail demand following suit.
Several key signals are particularly noteworthy:
The premium of Shanghai silver over London prices has significantly climbed and remains persistently at historically high levels, clearly reflecting strong Chinese physical and investment demand. Indian silver premiums have also seen a rare recent rebound – historically, India typically buys heavily only at low prices and shows restraint at highs.
Citi notes that the simultaneous emergence of "chase-demand" from both China and India, against a backdrop of already substantial price increases, is itself a key characteristic of this silver bull cycle.
Policy cooling measures struggle to halt the trend; retail investors act more like CTAs than "height-fearing capital."
Addressing market concerns about "regulatory intervention," Citi's assessment is quite clear: it is unlikely to change the trend in the short term.
Recently, several "cooling measures" have appeared in the Chinese market, including: the suspension of new subscriptions for China's only silver ETF, and the previous increase in silver futures margin requirements by the Shanghai Futures Exchange.
However, Citi believes these measures affect the trading pace more than the trend direction.
The reason lies in the behavioral pattern of Chinese retail investors, which more closely resembles: trend-following CTAs, rather than value-return investors.
In a market environment with strong momentum and trends, as long as silver remains not "outrageously expensive" relative to gold, capital tends to continue adding positions along the trend, thereby further tightening the supply-demand balance in the physical and circulation markets.
A rally where fundamentals "fail": ETF outflows and declining holdings cannot stop the rise.
A counter-intuitive yet highly significant phenomenon is that silver's sharp price surge is occurring alongside the simultaneous presence of several traditional "bearish indicators," including:
COMEX silver inventories have seen outflows of approximately 100 million ounces since last October. Global (ex-China) silver ETF holdings have seen net outflows of about 270 million ounces since December. CFTC data shows some managed money taking profits during the rise.
Under traditional frameworks, these signals should suppress prices. But the reality is that macro risk premiums plus Chinese retail demand have completely overshadowed these impacts. Citi直言 states that, at this stage, many traditional supply-demand and positioning models have "failed."
How much higher can silver go? The key lies in the "gold-silver ratio" as the measuring stick.
In a highly speculative market, Citi chooses the gold-silver ratio as a crucial reference for judging the upside potential.
Assuming a gold price range of $5,100–$5,400 per ounce:
If the gold-silver ratio falls to its 2011 low of around 32 times, the silver price could reach $160–$170 per ounce. In an extreme scenario, reverting to its post-Bretton Woods low of around 14 times in 1979, the theoretical price range would point above $300.
Citi emphasizes that the latter scenario is "highly improbable," but it clearly indicates that, from a historical relative valuation perspective, silver's "room for imagination" is not yet capped.
Conclusion: This is a silver re-rating driven by capital and behavior.
Overall, Citi's outlook for silver over the coming weeks is highly clear: maintain a tactical bullish view, with the 0–3 month target price raised to $150 per ounce.
Core drivers stem from: macro and geopolitical risk premiums, retail and physical demand led by China, and historical valuation levels where silver remains not "excessively expensive" relative to gold.
However, Citi also cautions that the period before the Chinese Lunar New Year could present a risk window for short-term profit-taking in silver. At the time of the report's release, approximately two weeks remained before the holiday, and the macro and capital factors supporting silver's rise were still expected to persist in the short term.
In Citi's view, this is not a rally driven by "meticulous calculations of supply-demand balance," but rather a precious metals re-pricing process shaped by capital preferences, risk pricing, and herd behavior.
The market carries risks; investment requires caution. This article does not constitute personal investment advice, nor does it consider individual users' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions herein suit their particular circumstances. Investments made accordingly are at one's own risk.
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