In Years Ahead, $24/Ounce Silver Will Look Like a Great Deal
Silver is undervalued at the moment, and it wouldn’t be surprising if, in a few years from now, we end up saying, “Silver at $24.00 an ounce was cheap.” At the current level of approximately $24.00 per ounce, silver prices seem like a Black Friday deal.
Here’s what investors need to know: there’s a silver rush in the making. You don’t hear about it, though, because silver isn’t as hot as things like Bitcoin or certain artificial intelligence (AI) stocks.
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To see what’s happening with silver, take a look at the U.S. Mint sales. The mint has been selling silver bullion at a very fast pace.
Year-to-date, the U.S. Mint has sold 23.3 million ounces of silver in American Eagle coins. In the entire year of 2022, the U.S. mint only sold 16.0 million ounces. (Source: “Bullion Sales,” U.S. Mint, last accessed November 23, 2023.)
That means the U.S. Mint’s silver bullion sales in 2023 have already surpassed their 2022 levels, up by 46% year-over-year. Keep in mind that there are still a few weeks left in the year.
And it’s not just the U.S. Mint: other mints have been seeing robust demand for silver as well.
For instance, the Royal Canadian Mint sold 9.1 million ounces of silver bullion in the second quarter. (Source: “Royal Canadian Mint Reports Profits and Performance for Q2 2023,” Royal Canadian Mint, August 18, 2023.)
The Perth Mint (Australia) sold 13.5 million ounces of silver bullion between January and October. (Source: “Gold Bullion Sales at the Perth Mint Continued to Climb in October,” CoinNews.net, November 7, 2023.)
Beyond this, take a look at India’s silver imports. The country is one of the biggest precious metal consumers.
In October, India imported $1.31 billion worth of silver. That’s compared to just $585.2 million in October 2022. This represents a year-over-year increase of close to 125%. (Source: “Quick Estimates for Selected Major Commodities for October 2023,” India’s Ministry of Commerce and Industry, last accessed November 23, 2023.)
Fundamentals in Favor of $50/Ounce Silver Prices
Seeing the current demand for silver makes my bullish stance on silver much stronger. I’ve seen this before: investors rarely rush to buy an asset when it’s low-priced and ignored. Instead, they tend to rush to buy it when prices are moving higher.
Silver prices have been suppressed for a while now, but the fundamentals remain solid. That’s why I continue to believe that $50.00-an-ounce silver could be achieved much sooner than expected.
I can say with a lot of confidence that, when silver prices are around $50.00 an ounce, you’ll hear all about how the gray precious metal is the hottest thing to invest in. Sadly, by the time silver is around that price, one would have missed the major upside.
Short-Term Silver Price Outlook
Looking at the below silver price chart, there are three interesting developments.
Chart courtesy of StockCharts.com
1. Silver prices continue to find a lot of support around their 200-week moving average. This is saying the long-term trend remains intact and that investors could be using this moving average as a buying point.
2. Silver’s moving average convergence/divergence (MACD), which is a momentum indicator, is starting to change direction and is about to enter positive territory. This says buyers are starting to increase, which could take silver prices higher.
3. The silver price level between $24.00 and $26.00 is worth watching closely. If this resistance level breaks, we could see a bullish run in the price of silver to more than $30.00 an ounce. Could this really happen? I think it’s possible, given that silver’s MACD and 200-week moving average suggest that buyers are present.
Where’s the Opportunity as Silver Prices Surge?
Dear reader, I believe that, as the price of silver moves higher, stocks of silver miners could provide leveraged returns to investors. I’ve seen this several times over the past decade or so. Whenever the gray precious metal increases in price, the miners tend to do much better.
I think shares of miners that have properties in mining-friendly jurisdictions, low production costs, and strong management teams could lead the way and provide investors with robust profits.
If silver prices make run toward $50.00 an ounce, that would b ea little over 100% above the current spot price of silver. But it wouldn’t be surprising to see the prices of some mining stocks soar by 200%, 300%, or more.
