UBS is standing by its bullish call on silver, saying recent price weakness triggered by market turmoil over Donald Trump’s new tariff policies is likely to be short-lived.
Silver briefly slipped below $30 an ounce this month as investors reacted to fears of a global slowdown and rising trade tensions.
The gold-to-silver ratio also spiked to 100 - a level historically associated with periods of stress.
But UBS argues in comparison to past crises, such as the 2008 crash or the Covid, the sell-off is overdone.
While industrial demand for silver (used in everything from solar panels to electronics) could soften in the near term, the bank expects investment demand to pick up.
UBS says deeper-than-expected rate cuts from the US Federal Reserve would likely lift precious metals across the board. If bond market liquidity deteriorates, that could also push investors further into safe-haven assets like silver and gold.
It forecasts silver prices will recover to $36 an ounce by June and reach $38 by the end of the year. It also points to relatively stable activity in silver-backed exchange-traded funds (ETFs) and contained volatility in options markets as signs that investors remain engaged.
For investors looking to take advantage of the pullback, the Swiss bank recommends maintaining long positions in silver and even sees opportunities to boost returns by selling downside risk, an options strategy that benefits from recent price swings.
Despite the current risk-off mood in markets, UBS believes silver remains well supported by macro trends; particularly the potential for a weaker dollar and lower real interest rates.
That, combined with renewed appetite from investors, should help prices rebound through the second half of the year.
In early afternoon trading, silver was down almost 11% at $30.34 an ounce.