Massive Supply and Demand Disparity Calls for Soaring Silver Prices
If you are looking for the next big trade, don’t overlook silver prices. The gray precious metal could be selling for a massive discount and presenting the opportunity of a lifetime.
Understand that the fundamentals of the silver market are improving in favor of the bulls, and they suggest that the silver price could surge.
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There are supply issues in the silver market. Production is in a slump.
Consider U.S. silver production.
In the first three months, silver mine production amounted to 217,000 kilograms. (Source: “Silver In March 2018,” U.S. Geological Survey, last accessed June 26, 2018.)
In the same period a year ago, silver mine production was 274,000 kilograms.
Simple math: silver production declined by about 21% year-over-year. No matter how you look at it, this is an outright collapse in production.
Other silver-producing regions are reporting declines as well.
For example, in Canada, in the first four months of 2018, silver production amounted to 125,799 kilograms—about three percent lower than the same period a year ago. (Source: “Production of Silver,” Natural Resources Canada, last accessed June 26, 2018.)
But don’t just get fixated on the U.S. and Canada’s silver production. This phenomenon prevails on a global level.
In 2015, global silver mine output was 895.1 million ounces. In 2017, mine production dropped to 852.1 million ounces. This represents a decline of close to five percent. (Source: “World Silver Survey 2018,” The Silver Institute, last accessed June 26, 2018.)
Going forward, you can expect silver production to decline further.
At the current silver prices, it’s very difficult for a silver miner to ramp up production. Their costs are way too high, and they haven’t spent much on exploration either.
Silver Demand Side Remains Strong, Just Look at India
As for demand, it’s solid, to say the least.
Look at India. The country is building up an appetite for silver and it shouldn’t be ignored.
In May, the country imported $445.02 million worth of silver. (Source: “Quick Estimates For Selected Major Commodities For May 2018,” India Ministry of Commerce and Industry, last accessed June 26, 2018.)
We have been following silver import figures from India closely. They have improved significantly over the last one year. In fact, it wouldn’t be wrong to say that Indian consumers’ hunger for silver is much more than their hunger gold.
Also, keep in mind that silver isn’t just a precious metal.
Its used in various industries as well.
For instance, you really can’t have solar energy without silver. And demand for solar panels around the world is increasing.
The “iPhone” contains several grams of silver and so do other cell phones.
Silver Prices Outlook: A Rapid Move to the Upside Could Be Ahead
Dear reader, I have said several times before in these pages and repeat myself now: What has happened to the silver market in the past few years has been a blessing in disguise.
The silver market has moved immensely in favor of the bulls, but the silver prices are not reflecting this just yet. There’s a massive supply and demand disparity, which calls for a rapid move to the upside.
The longer that the silver market remains ignored, the bigger the move we will see in silver prices. I truly believe conditions are ripe for $30.00–$35.00-an-ounce silver prices sooner than later.
If silver prices are able to break above those levels, don’t be shocked to see $50.00-an-ounce silver.
