Bank of America (BofA) has released a bullish forecast for silver, projecting that the precious metal will enter a new bull market driven by macroeconomic shifts, industrial recovery, and green energy adoption. The bank's analysts estimate that silver prices will average $35 per ounce by 2026, representing a nearly 20% increase from the current spot price of $29.19/oz.
End of Rate Hikes and Safe-Haven Appeal
The report highlights that the global central bank tightening cycle is nearing its end, creating a favorable environment for precious metals. BofA strategists believe that the Federal Reserve and other major central banks will halt interest rate hikes in the coming quarters, reducing the attractiveness of fiat currencies and bonds. This shift is expected to channel capital into gold and silver as alternative stores of value. Notably, gold is forecast to reach $3,000/oz by 2025, and its strong performance is likely to spill over into silver, as historical patterns show that silver often catches up to gold during the later stages of a bull market.
Industrial Demand Rebound: The Key Catalyst
Silver's underperformance versus gold in recent years has been largely attributed to weak industrial demand, which accounts for approximately 50% of total silver consumption. However, BofA sees signs of a global industrial recovery taking shape. Sectors such as electronics, automotive, and particularly solar photovoltaic (PV) manufacturing are expected to drive higher silver offtake. The report emphasizes that next-generation solar panels require significantly more silver per unit compared to legacy technologies. As solar installations continue to grow worldwide, silver demand from the renewable energy sector could accelerate at an annual rate of 3% to 5%. This structural shift provides a long-term support floor for prices.
Technical Breakout and Positive Feedback Loop
From a technical perspective, BofA analysts note that silver is approaching key resistance levels near $30/oz. A decisive break above this threshold could trigger a wave of momentum buying from hedge funds and ETF investors. Currently, silver ETF holdings are near multi-year lows, but fund flows have started to turn positive. If silver breaches $30, a self-reinforcing cycle of price gains and capital inflows could materialize, pushing prices toward $35/oz and beyond. The bank also warns that silver is a highly volatile asset, and short-term corrections are possible, but the medium-term outlook remains constructive.
Risks and Outlook
BofA outlines several downside risks: a weaker-than-expected global economic recovery could dent industrial demand; the Fed may delay rate cuts, keeping real yields high; and rising mine supply from Mexico and Peru could cap gains. Nevertheless, the bank's base case remains bullish, targeting an average silver price of $35/oz by 2026. Investors are advised to accumulate positions on dips to capture the expected upside in the precious metals cycle.