Here’s Why Silver Prices Could Soar
If you are discouraged by the recent fluctuations in silver prices, know that the gray precious metal remains one of the best-performing assets of 2016—and there could be much more upside ahead.
It is astonishing to see how no one is willing to pay any attention to consumer demand for silver. In the mainstream, we are told everything but how there’s a “silver rush,” in progress. Investors are buying the precious metal despite where silver prices stand.
Let me explain…
To see how investors are reacting to silver’s price, we must pay attention to precious metal sales at mints around the world.
Consider this: year-to-date, the U.S. Mint has sold close to 15 million ounces of silver in American Eagle coins. In the same period a year ago, the Mint sold just 12 million ounces of silver. (Source: “Bullion Sales/ Mintage Figures,” U.S. Mint, last accessed March 29, 2016.) This represents an increase of about 25% year-over-year.
But, those numbers don’t really do the situation in silver any justice. There’s more to it.
If the sales of silver remain consistent, the U.S. Mint is on track to sell 60 million ounces of silver in 2016. This will be the highest on record! In 2015, the Mint sold 47 million ounces of silver. You also have to keep in mind that this is happening all while silver prices are subdued.
Looking at the global level, demand for the gray precious metal remains exuberant. Major mints are reporting extraordinary figures. For instance, Australia’s Perth Mint reported a triple-digit gain in silver sales in 2015. In the first two months of 2016, the Perth Mint saw stellar silver sales again.
Here’s one thing you have to remember, too: India, one of the biggest gold consumers, is building appetite for silver. Over the past year, we have seen a significant amount of silver imported into the country. Now, we are hearing a lot of noise that suggests the gray precious metal is gaining popularity among Indian consumers. For them, it’s a great and cheap alternative to gold. This growing phenomenon could serve to further boost silver demand.
Here’s How to Earn Leveraged Returns on Silver Prices
I could go on and on about how there’s ample demand for silver. I haven’t even mentioned the exchange-traded funds (ETFs) that hold physical silver. They are witnessing inflows as well. However, the point here is very simple: silver prices are down roughly 70% from their 2011 highs and demand is surging. With silver prices down, you’d expect the complete opposite—investors running away. Instead, they are clearly buying.
This demand shouldn’t go unnoticed. I have said this many times before and will continue to say it over and over: higher demand at low prices will create a shock in the silver market.
Know that over the years, suppressed precious metal prices have caused a lot of damage—and it won’t be fixed instantly. It will take time. In that time, silver prices will soar.
Pay attention to the silver miners as the precious metal sets up to skyrocket. You could make leveraged returns with them. In fact, if silver prices go up by 100%, you could make several times that with silver miners. They’re simply one group you can’t ignore right now.