Could Silver Prices Hit $30.00? It’s Possible
Silver prices are down for the year, but investors must think long-term. The gray precious metal looks undervalued; don’t be surprised if silver prices see a massive move to the upside.
If you look at the chart of silver prices below, you will see nothing but pessimism. The precious metal prices trade below their 50- and 200-day moving averages (MAs). This suggests both long-term and short-term trends are pointing to the downside.
Chart courtesy of www.StockCharts.com
The silver prices you see are nothing but the result of investors’ perceptions. You have to look at the fundamentals of the silver market to get a true idea of where silver prices are going.
Two Factors Could Send Silver Prices Soaring
There are two factors investors should be watching closely: money supply and national debt on the global level.
The amount of money supply across the global economy is shooting through the roof. Take India’s M1 money supply, for example. The M1 money supply is the most basic from of money supply measures. In India, since 2008, the M1 money supply has increased by about 124%. (Source: Federal Reserve Bank of St. Louis web site, last accessed November 10, 2015.)
Mind you, India isn’t the only country that has seen this sort of increase in its money supply. The U.S., Japan, China, the eurozone, Indonesia, Brazil, and many more countries and regions have also increased their money supplies. Plus, it’s only expected to go higher as central banks are adamant about printing.
Growing money supplies worldwide is great news for silver prices.
Then there’s the national debt on a global level; it foretells a bullish outlook for higher silver prices as well.
Simply put, national debts worldwide are increasing. The U.S. national debt stands at more than $18.0 trillion at present and the Japanese national debt, which stands at 226% of the country’s gross domestic product (GDP), is expected to rise 400% by 2040. (Source: The Telegraph, April 15, 2015.) But the U.S. and Japan aren’t the only countries with massive national debts; this phenomenon prevails across the globe.
As national debts increase, it essentially impacts the value of currencies worldwide, leading to a demand in safe havens. This means demand for silver will rise and silver prices will increase in tandem.
Why Do I Remain Bullish Towards Silver Prices?
Over the past few years, investors have bought into the narrative that the Federal Reserve will raise rates, so investors should sell silver and gold and invest in stocks, securities, and notes that will benefit from an interest rate hike. While the theory has some legs, it must be noted that interest rates aren’t the only factor affecting silver prices; there’s much more to the equation.
Regardless of what’s said in the mainstream, I am bullish towards silver prices. I believe the gray precious metal is presenting an opportunity of a lifetime. Let me be bold here and say this: the odds of silver prices rising are much higher than the odds of a major downside in the precious metal.
I will also say this: I fully expect silver prices to do much better on a percentage basis than gold prices. If silver doubles from the current level, it will hit $30.00 an ounce, which is a level we have seen before in silver prices. However, if gold doubles in price to hit $2,200 an ounce, investors may have a hard time digesting it. An equivalent hike on a percentage basis is much more likely for silver than gold, and that’s why I favor a bullish stance toward silver prices at this time.