Here’s Why Silver Prices Could Skyrocket
If you are looking for the next big trade, it may be a wise idea to pay attention to silver prices.
The gray precious metal is showing all the traits that produce big gains.
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Let me explain…
Basic economics suggests that, for asset prices to go higher, there are a few things that must occur. You want to see demand increasing, supply shrinking/remaining flat, and investors’ preferences turning favorable.
As it stands, all of this is happening in the silver market, and this suggests that much higher silver prices could be ahead.
Understand that 2016 is on track to be the year when silver prices rise for the first time since 2012. In 2017, don’t be shocked to see silver show up on many investors’ buy list.
Why would investors buy silver in 2017? You see, usually, in the early part of the year, investors buy asset classes that increased in the previous year and ditch those that were underperforming. So, as silver prices showed stellar performance this year, there could be investors buying it in 2017.
Looking at the demand, it’s exuberant, to say the least.
Buyers remain, regardless of where silver prices stand. It’s interesting to note that buyers haven’t budged, despite severe negativity towards the gray precious metal.
For instance, look at Australia’s Perth Mint. In the first 10 months of 2016, silver sales at the mint amounted to 10.82 ounces. This was 15.5% higher than the same period a year ago. (Source: “Perth Mint Gold Bullion Sales Soar in October,” CoinNews.net, November 9, 2016.)
Don’t for a second think it’s only the Australian mint reporting phenomenal sales. This is the case across the globe.
Looking at the supply side, it remains dire.
Look at my previous post on silver to see what I wrote about the supply side of the silver market: Precious Metals: Here’s Why Silver Prices Could Soar to $50.00 an Ounce.
At the very core, major silver-producing regions are producing at the lowest level since 2012.
With all this said, investors must be questioning: if all the bases are loaded for silver to be the next big trade, why aren’t the prices moving?
This Could Be the Catalyst…
As I see it, the Federal Reserve’s upcoming interest rate hike could be the catalyst that causes investors to jump in and buy silver. This could cause silver prices to soar quickly.
After the last interest rate hike, silver prices jumped from $14.00 an ounce to close to $21.00 an ounce in a matter of six months. This represents an increase of about 50%!
It wouldn’t shock me for one second if we see something similar this time around, as well. If we assume that silver prices jump 50% again, it would mean silver prices of close to $25.00 an ounce in the next few months.
But, thinking long-term is the key here.
If the conditions in the silver markets don’t change, we could see much bigger returns, and at a very accelerated pace.
This may sound bold, but a 50% gain in the long run on silver could look menial. Think gains of 300% to 500% on the gray precious metal in few years.
