20-Day Ahead Probabilistic Forecast of Spot Silver

 

A big shout-out and thanks to EODHD.com for providing the data for this post.

Current Silver Price: $58.52/oz
Model: ARIMA(1,0,1)-GARCH(1,1) with 1,000 Monte Carlo simulations

Forecast Date 3 Dec 2025

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Why This Model Beats Traditional Technical Analysis

Traditional technical analysis relies on pattern recognition, support/resistance levels, and indicator signals—all inherently subjective and backward-looking. Our probabilistic approach offers three critical advantages:

1.      Quantified Uncertainty: Instead of binary predictions, we provide probability distributions showing the full range of likely outcomes with confidence intervals.

2.      Dynamic Volatility Modeling: GARCH captures volatility clustering—the tendency for large price moves to follow large moves—which technical indicators miss entirely.

3.      Objective Risk Assessment: Monte Carlo simulation generates 1,000 possible price paths, allowing investors to quantify downside risk and upside potential with precise probabilities.

Even using only price data, this statistical framework extracts information that chart patterns cannot: the probability distribution of future prices, not just directional guesses.

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The 20-Day Forecast: Key Takeaways

Our model forecasts silver prices through December 31, 2025, with the median (Q50) trajectory rising from $58.52 today to $61.04 by day 20—a 4.3% gain. However, the 80% confidence band widens significantly over time, reflecting increasing uncertainty.

Chart 1: Probabilistic Forecast Fan Chart

The blue line shows the median forecast, while the shaded band represents the 80% confidence interval (Q10 to Q90). Notice how uncertainty expands from $2.48 on day 1 to $11.88 by day 20. Current price ($58.52) sits near the median, suggesting balanced risk/reward.

Table 1: Daily Forecast Quantiles

Date	Q10 (Lower)	Q50 (Median)	Q90 (Upper)	Range
2025-12-04	$57.54	$58.64	$60.02	$2.48
2025-12-05	$57.09	$58.84	$60.67	$3.58
2025-12-08	$56.73	$58.92	$61.17	$4.44
2025-12-09	$56.50	$59.10	$61.56	$5.06
2025-12-10	$56.17	$59.22	$61.94	$5.77
2025-12-11	$56.21	$59.33	$62.67	$6.47
2025-12-12	$56.11	$59.49	$62.97	$6.86
2025-12-15	$55.86	$59.61	$63.30	$7.44
2025-12-16	$55.77	$59.76	$63.77	$8.01
2025-12-17	$55.99	$59.82	$64.01	$8.02
2025-12-18	$55.69	$60.03	$64.62	$8.93
2025-12-19	$55.67	$60.07	$64.98	$9.30
2025-12-22	$55.61	$60.21	$65.15	$9.55
2025-12-23	$55.66	$60.30	$65.41	$9.75
2025-12-24	$55.55	$60.33	$65.89	$10.34
2025-12-25	$55.51	$60.45	$66.52	$11.00
2025-12-26	$55.51	$60.55	$66.61	$11.10
2025-12-29	$55.58	$60.67	$66.90	$11.32
2025-12-30	$55.66	$60.80	$67.17	$11.51
2025-12-31	$55.54	$61.04	$67.43	$11.88

Key insight: The median forecast shows steady appreciation, but the widening range indicates growing uncertainty. By day 20, there's an 80% probability silver will be between $55.54 and $67.43.

Chart 2: Monte Carlo Simulation Paths

This chart displays 100 of the 1,000 simulated price paths. The gray spaghetti shows the range of possible outcomes, while the blue line tracks the median. Notice the divergence: some paths reach $70+, others dip below $55. This visualization captures the full spectrum of risk.

Table 2: Target Price Probabilities

Target Price	Hit Any Day (%)	Close Above Day 20 (%)
$55	100.0%	92.2%
$57	99.4%	82.2%
$60	79.2%	60.1%
$62	54.7%	41.7%
$65	25.7%	19.9%
$68	10.2%	8.5%
$70	4.5%	3.4%

Investment implications:
• $60 target: 79% chance of hitting during the period, 60% chance of closing above on day 20—favorable odds for bulls.
• $62 target: 55% hit probability but only 42% close-above—expect volatility around this level.
• $65 target: 26% hit probability, 20% close-above—possible but requires strong momentum.
• $70 target: Only 4.5% probability—unlikely without major catalyst.

Chart 3: Target Price Probabilities

The gap between "Hit Any Day" (blue) and "Close Above Day 20" (orange) reveals mean-reversion tendencies. For example, silver has a 79% chance of touching $60 but only 60% of sustaining it—suggesting profit-taking opportunities.

Chart 4: Price Distribution at Day 20

This histogram shows the probability distribution of silver prices on December 31, 2025. The distribution is slightly right-skewed, indicating higher upside potential than downside risk. The median ($61.04) sits above the current price, supporting a bullish bias.

Investment Strategy for Physical Silver Buyers

·        Conservative Buyers: Wait for dips toward $57-58 (near Q10 levels in early days) to accumulate. The model shows 82% probability of staying above $57 by day 20.

·        Moderate Risk Tolerance: Current price ($58.52) offers balanced entry. Target $60-62 for 10-15% gains with 60-42% probability of success.

·        Aggressive Positioning: Scale in now and add on pullbacks. The 26% probability of hitting $65 (11% upside) offers asymmetric risk/reward given bullish macro catalysts.

·        Risk Management: Set stop-loss at $55 (Q10 floor). Only 8% of simulations breach this level, making it a statistical outlier.

Macro Catalysts Supporting Upside

·        Fed rate cuts (Dec 9-10) reducing opportunity cost of holding non-yielding assets

·        China export controls on physical silver (Jan 1) tightening supply

·        India allowing silver as loan collateral, boosting demand

·        Extreme backwardation in futures signaling physical shortage

·        Surging industrial demand from solar/EV sectors

These factors are not priced into our model (which uses only historical price data), suggesting the forecast may be conservative. The true probability of upside scenarios could be higher than modeled.

Conclusion

Our probabilistic forecast provides a data-driven framework for silver investment decisions. The median outlook is modestly bullish (+4.3% to $61), with 60% probability of reaching $60 and 20% chance of $65+. The widening confidence bands remind us that silver remains volatile—but for investors with conviction in the macro thesis, current levels offer attractive risk/reward.

Unlike technical analysis, which offers subjective chart interpretations, this model quantifies probabilities, enabling rational position sizing and risk management. Use the target probabilities to set realistic expectations and the quantile forecasts to time entries.

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Disclaimer: This forecast is for informational purposes only and does not constitute investment advice. Silver prices are highly volatile and subject to numerous unpredictable factors. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.