Demand and Supply to Cause Rally in Silver Prices
Going into 2017, it could be a great idea for investors to pay attention to silver prices. The fundamentals of the silver market suggest that big gains could be ahead in the New Year.
As it stands, the demand for the precious metal is surging while the supply side is struggling. This says that a shortage could be in the making, which could lead to much higher silver prices within a very short period in 2017.
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You don’t have to take that claim as it is; look at the numbers yourself.
Understand that, as silver prices remain low, it’s harder for miners to produce profitably. Regions known to produce significant amounts of silver are reporting anemic production figures.
Chances are, it won’t be mentioned in the mainstream media. Mexico is the biggest silver-producing country in the world and, for first 10 months of 2016, its average monthly production was the lowest since 2012. It’s on track to produce the lowest silver since 2010. (Source: “Value and volume production of Silver,” Servicio Geológico Mexicano, last accessed December 22, 2016.)
But it’s not only Mexico where production is anemic. This is the case across other major silver-producing regions as well.
As for the demand side, there are four things that investors should be looking at.
- Silver sales at mints around the world are robust. Don’t just pay attention to the U.S. Mint; look at others, like the Royal Canadian Mint and Australia’s Perth Mint as well.
- Silver is gaining a significant amount of attention in India. Know this: India has a reputation of having solid appetite for gold. If Indian consumers turn more in favor of silver, it could be big. More silver will be needed there.
- Don’t ignore the speculators. In 2016, silver prices increased for the first time since 2012. This could entice speculators into buying silver. You see, with silver prices down significantly from their highs, many investors got scared and didn’t have many reasons to jump in. We could see them come back in 2017.
- Keep in mind, silver is an industrial metal. It is used in a significant number of technologies, and technology use is expected to keep going higher. Be it solar panels, smartphones, or computers, this will require a massive mount of silver.
Silver Prices Outlook for 2017: Big Opportunity for Investors Ahead
Over the past few years, the fundamentals of the silver market have gotten better. Investors have sold the precious metal mainly in anticipation of higher interest rates and nothing else. Don’t get lured into this.
When the fundamental start to matter, we could see a silver rush that would send silver prices soaring much higher. 2017 could be when this happens.
Where’s the big opportunity? When silver prices move higher, silver mining companies are going to be the biggest beneficiaries. Over the last few months, with silver prices coming down, few of the lowest-cost silver producers are selling at massive discounts.
If silver prices soar to even $25.00 an ounce in 2017, about 56% up from current price levels, we could see some silver miners increase in value by 200% or more, easily.
