Bank of America (BofA) has released a research report projecting a strong bullish trend for silver, with analysts forecasting an average price of $35 per ounce by 2026, compared to the current spot price of $29.19/oz. The outlook is underpinned by several macro and sector-specific catalysts, including the anticipated end of central bank interest rate hikes, increased investment demand for precious metals, and a structural boost from the solar energy industry.
End of Rate Hikes and Gold Spillover
The report highlights that as major central banks conclude their tightening cycles, real interest rates are expected to decline, which historically benefits precious metals. BofA also predicts that gold prices will reach $3,000 per ounce by 2025. Given the strong price correlation between gold and silver, a rally in gold typically spills over into silver. The current gold-to-silver ratio stands at around 80:1, well above historical averages, suggesting significant upside potential for silver if the ratio reverts toward its mean.
Industrial Demand Recovery and Solar Panel Technology
Silver has underperformed gold primarily due to weak industrial demand, which accounts for roughly 50% of global silver consumption. However, BofA analysts expect that a recovering global economy will revive industrial activity and boost physical silver offtake. Moreover, the next generation of solar photovoltaic cells—such as TOPCon and heterojunction technology—requires 20% to 30% more silver per watt compared to traditional PERC cells. As solar installations continue to grow worldwide, this silver-intensive shift is expected to create a structural demand boost. The report notes, “The solar industry is entering a new technology upgrade cycle, and silver's role as a key conductive material will drive demand growth that could surpass current expectations.”
Investment Sentiment and Market Dynamics
Given silver's smaller market size and higher price elasticity compared to gold, BofA argues that once bullish sentiment solidifies, capital inflows could accelerate price gains. “We expect gold's persistent strength to attract more capital into the precious metals complex, and silver will become a focal point due to its higher volatility and valuation catch-up potential.” If the solar sector continues its expansion, silver could enter a positive feedback loop driven by both investment and industrial demand, ultimately pushing prices above $35 per ounce.
In summary, Bank of America's forecast reflects a fundamentally positive view on silver's supply-demand balance. With macro liquidity easing, a gold bull market, and green energy transition as three converging forces, silver is poised to end its two-year underperformance and become one of the standout assets in 2025-2026.