Usman Salis
A coordinated retail investor movement is targeting the silver market, highlighting unprecedented supply constraints and potential for a significant price breakout, with experts predicting silver could surge to $40-$50 in the near term.
The Silver (XAG) Squeeze Movement Gains Momentum
Silver is once again capturing the attention of investors and market analysts. After an impressive 40% gain over the past 12 months and trading above $34 an ounce, a new grassroots campaign dubbed "Silver Squeeze 2.0" is emerging across social platforms like X (formerly Twitter).
The movement echoes the 2021 Reddit-driven silver squeeze but comes with a more nuanced market backdrop. Investors are strategically planning a collective physical silver purchase on March 31, challenging what they perceive as a manipulated paper market.
Technical Indicators and Market Dynamics
Peter Krauth, author of The Great Silver Bull, provides critical insights into the current market landscape. The silver market is showing remarkable technical signals, with approximately 223 million silver ounces currently net short—representing about 25% of annual mine supply.
Even more striking is the paper-to-physical silver ratio, which stands at an extraordinary 378 to 1. This imbalance suggests significant potential for market correction and price volatility. During the 2021 squeeze, silver ETF volumes surged ninefold, with prices jumping from $25 to $29.50 in a short period.
Industrial Demand and Supply Constraints
Silver's industrial relevance has grown substantially, now representing 60% of annual usage compared to 50% a decade ago. Sectors like solar energy, electronics, and electric vehicle manufacturing are driving this increased demand.
The supply side presents an equally compelling narrative. Metals Focus reports four consecutive years of global supply deficits, averaging 200 million ounces annually. These shortfalls have been met not through increased mining output, but by drawing down inventories from exchanges like LBMA and COMEX.
Inventory movements have been particularly noteworthy. LBMA inventories have decreased by 40-50% in recent years, with significant quantities moving into private vaults in New York. Geopolitical tensions, including potential U.S. tariffs on imported metals, are further complicating the supply landscape.
Price Predictions and Investment Strategies
Krauth and other industry experts are bullish on silver's potential. He predicts silver could reach $40 in the second half of this year and potentially hit $50 in 2025. Some analysts are even more optimistic, suggesting a possible range of $70-$100 if key technical levels are breached.
Long-term forecasts are even more ambitious. While Krauth suggests silver could eventually reach $300, notable investor Eric Sprott speculates on a $250-$500 range.
For individual investors, Krauth recommends a measured approach: start with a small allocation and consider purchasing in tranches, taking advantage of potential market dips.
The Broader Market Context
While the March 31 coordinated buying event may or may not be a definitive catalyst, it highlights broader market conversations around inflation, de-dollarization, and potential market manipulations.
The current silver market isn't just about retail investor sentiment. Real market tightness, evolving industrial demand, and complex geopolitical dynamics are converging to create a potentially explosive scenario for silver (XAG) investors.
Usman Salis
