Silver Prices Trading at Rock Bottom
Silver prices currently sit at the lowest level since 2009. This has many worried about where the precious metal could go next. Remember that in times like these, you must look at the basics: demand and supply.
Just last week, I was attending a conference in San Francisco (you can read more about the conference here) and I had the chance to meet with a silver and gold bullion dealer, Silver Gold Bull Inc.
Silver Demand Strong, Says Precious Metal Dealer
This company is based out of Canada, but it’s making solid strides to step into the U.S. market and eventually expand into Europe and Asia. Silver Gold Bull deals directly with the Royal Canadian Mint and the Perth Mint. It also buys a significant amount of bullion products from other mints as well. I talked to Mihali Belandis, a managing partner at Silver Gold Bull.
Saying the very least, it was a very interesting discussion. It only made the argument I have been making in these pages for some time stronger. My argument: despite silver prices being down, demand for the precious metal remains solid.
Chart courtesy of www.StockCharts.com
“We have been in business six years, we have seen growth each year,” said Mr. Belandis regarding the business’ condition.
This is impressive, as you would expect the business to do horrible when silver prices and gold prices have crashed from their highs of around $50.00 and $1,900 an ounce, respectively.
Mr. Belandis then offered a more recent example of how much demand there is for the precious metals: “In August and September, we [Silver Gold Bull] sold over 15 tons of silver each month.” Remember that in August and September, silver prices took a severe beating. Silver Gold Bull selling more than one million ounces of silver (15 tons = 529,109 ounces x 2 = 1,058,218) alone should really tell you something.
With all this demand and precious metal prices down, one must wonder, what is really happening? Why aren’t prices shooting through the roof?
As Mr. Belandis noted, “The [precious metal] market is going to rebound, we don’t know when or by how much, but it will. This has happened in past and this is nothing new.”
Silver Prices Outlook for 2016
Dear reader, the demand situation in the gold and silver markets is strong and it has been noted in these pages over and over again. When you look at the other side, the producers, they’re struggling.
Looking at all this, my convictions are now much strong than ever: silver prices and gold prices remain undervalued. The precious metals market is improving and eventually, this will show up in the prices.
What do I expect in the short-term? Over the last two years, we have noticed that near the end of the year, from mid- to late December, silver prices and gold prices get slammed, but they tend to rebound in January. Don’t be surprised if this is the case this time around as well; 2016 is looking good for precious metals.
I continue to keep my eyes on a few gold and silver mining companies. If the precious metal prices get slammed in mid-December, these companies will present even greater discounts. As it is, they are selling for pennies on the dollar and investors continue to ignore them.