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While markets have focused on the sharp fall-off in gold prices since September last year, the drop in silver prices has been proportionally greater. Bullion prices are 17.5 percent lower year-to-date; silver is down 26.4 percent.
In its latest commodities report, Bank of America forecast silver prices will average $24.35 per ounce in 2013 — 25.5 percent lower than its previous prediction of $32.70.
"We believe the fundamental backdrop for silver has weakened," the bank's analysts, led by metals strategist Michael Widmer, said in a report on Tuesday.
Widmer said silver had been struck a dual blow by deceleration in world industrial activity, coupled with a gradual recovery in the global economy which has seen investors move away from the traditional safe-haven metals.
"The visible underperformance of silver prices was, in our view, heavily influenced by a lack of industrial demand. This is perhaps best reflected in silver imports from the U.S. and Japan generally hovering well below the longer-term average in the past 18 months. The picture has been similar in China year-to-date. While the country has remained a net importer, shipments have generally not broken out of the longer-term ranges," said Widmer.
Perhaps most importantly, investors are no longer purchasing precious metals as a hedge against an upswing in inflation.
"Investors bought both gold and silver in the wake of the financial crisis, with a view that monetary easing, especially in the advanced nations, would cause significant inflationary pressures. Yet, partially due to a lack of economic growth in many countries and, therefore, persistent large output gaps, market participants have more recently shown apprehension over disinflation," Widmer said.
In a blog post for CNBC last week, Daryl Guppy, author of "Trend Trading, The 36 Strategies of the Chinese for Financial Traders," said silver's downward trend boded ill for those hoping for a pick-up in bullion this year.
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"The behavior in silver has led the behavior in gold for more than 18 months. Silver's fall below the critical long term support level near $26.50 an ounce gave early warning of the recent collapse in gold," said Guppy.
"The silver chart shows that traders who are wishing for a rise in the gold price will be disappointed. The silver downtrend has a high probability of continuing and gold will follow."
In its report, Bank of America cut its 2013 outlook for gold by 12 percent to $1,478 per ounce — its second downgrade this year. Several of the major banks have also cut their outlooks for gold, including Goldman Sachs, BNP Paribas, Credit Suisse, Societe Generale and Citi.
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Widmer warned that silver could fall below $20 per ounce this year, but added that some demand strength remained for precious metals, potentially preventing a "complete meltdown" in prices.
"To pick just two indicators, CME gold inventories have fallen partially because traders have removed metal, refined and then shipped it to countries with healthier physical markets, like the Middle East. Meanwhile, sales of U.S. Silver Eagle coins, which are often picked up by retail buyers, have been running at a record pace seasonally. Of course, it is also worth noting that shorts have increased meaningfully, raising the risk of short technical spikes," he said.
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Widmer added that he was more bullish on gold over the long-term.
"In our view, the gold bull market is pausing. However, we believe the structural rally is not broken, and we see several scenarios that could push prices higher again," he said.
"To pick just one, more affluent emerging markets could increase metal purchases to such an extent that gold could trade at $2,000 per ounce by 2016, even if investors bought only a third of the gold they purchased in 2012."
—By CNBC's Katy Barnato