Silver Prices to Surge on Back of Cell Phone Demand
Silver prices continue to perform well compared to other asset classes so far in 2017. The gray precious metal is up over six percent year-to-date. Don’t for a second think that’s all.
All the stars are lining up for much higher silver prices in 2017.
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In these pages, much has been talked about how investors’ demand is soaring, and silver sales at mints around the world are accelerating. There’s one thing that hasn’t been talked about much; silver’s industrial use.
You see, too often, silver is looked as an alternative to gold, and this is true.
But silver is also an industrial metal. It has very high conductivity, so this makes the metal useful in many technologies like computers, cell phones, tablets, and other related gadgets.
Now, if more electronics are expected to be sold, then you can almost expect silver demand to increase as well. This could send silver prices soaring.
With this said, look at what Gartner Inc (NYSE:IT)—a leading information technology research and advisory company—is saying. It expects 1.89 billion mobile phones to be shipped in 2017. This figure is expected to increase to 1.92 billion by 2018 and 1.93 billion by 2019. (Source: “Gartner Forecasts Flat Worldwide Device Shipments Until 2018,” Gartner Inc, January 4, 2017.)
If you add the figures for the expected sales, it amounts to 5.75 billion cell phones from 2017 to 2019.
According to a report by the U.S. Geological Survey, in a typical phone there are about 0.35 grams of silver. (Source: “Recycled Cell Phones—A Treasure Trove of Valuable Metals,” U.S. Department of the Interior, last accessed January 27, 2017.)
This study was done back in 2005. Let’s assume that the silver used in a cell phone has come down to 0.30 grams.
Doing a simple calculation, 5.75 billion cell phones would require about 1.725 billion grams of silver or 55.46 million ounces (or 1,725 tons)!
Keep in mind, this is how much silver that could be needed for cell phones only. Products like personal computers (PCs), laptops, solar cells, and other related technology are not included in this calculation.
Looking at this, one must ask: with silver prices low and silver production in major producing regions being anemic, will there be enough silver to meet the demand? Or could we see some sort of shortage?
Silver Prices Outlook 2017: Shortage to Send Silver Prices Soaring?
In the past few years, my argument for higher silver prices has been simple; there’s a huge disparity in the silver market. The demand for the precious metal is solid, while the supply is dwindling.
It wouldn’t be surprising to me if the basic fundamentals started to matter once again in 2017. We could see silver prices trending higher and break well above the highs made in 2016, above $21.00 per ounce.
As something that’s been repeatedly mentioned in Lombardi Letter, pay attention to silver mining companies. As silver prices go higher, silver mining company stocks could skyrocket.
Also Read: Silver Price Forecast for 2017
