This Is Big for Silver Prices
If you are asking where silver prices are headed next, then just look at the demand for the precious metal. It makes a very strong bullish case for silver prices to be much higher by the end of 2016.
Mainstream media will have you convinced that customers for the precious metal are not there and that’s precisely why silver prices are down and it’s not worth owning. Wrong!
I certainly can’t deny that industrial demand for silver could be down, mainly due to the widespread slowdown in the global economy, and that major economic hubs are struggling to show growth. But don’t let this discourage you whatsoever. I have very strong conviction that investors’ demand will fulfill this gap. And once the industrial demand for silver comes back, we could be in for a shock.
Just recently, I talked about how demand is soaring at the U.S. Mint despite silver prices being down. (You can read more here: “Silver Prices: The Ridiculously Simple Reason to Be Bullish on Silver.”) Mind you, the U.S. Mint, so far in January, has already sold more coins than it did in the same period a year ago. We could have another record year of silver coin sales.
India’s Silver Demand Surging
The U.S. Mint isn’t the only place where the demand for silver is surging. Look at India, for example. The country with hunger for gold is buying a significant amount of silver. To give you some perspective, between April of 2015 and November of 2015, more than $2.65 billion worth of silver was imported into the country. (Source: “Quick Estimates For Selected Major Commodities For Import,” India Ministry of Commerce and Industry, last accessed January 27, 2016.)
Doing some simple math, if we assume that between April and November of 2015, silver prices averaged $15.00 an ounce, then India imported roughly 176.67 million ounces, or roughly over 5,000 tonnes, of silver during that eight-month period.
Digging a little deeper, according to the U.S. Geological Survey, in 2014, the global silver mine production was 26,100 tonnes. (Source: “Silver,” U.S. Geological Survey, last accessed January 27, 2016.) So, in a matter of just a few months, India imported 19% of the global mine production. That’s impressive and it’s something that shouldn’t be ignored.
But here’s some more food for thought…
If you have been paying attention to the currency market, you have likely noticed that currencies around the world are facing severe volatility—currency values have depreciated immensely. In fact, it is difficult to point to a currency that has done well over the past year besides the U.S. dollar.
With this in mind, you have to ask one question: what will investors do in those countries that are seeing their wealth decline all of sudden? I will not be shocked if they seek safety in safe-haven investments and use silver as one way to protect their wealth. You see, silver prices are still affordable and have much more room to grow than gold.
The demand for the gray precious metal as an investment could increase even more and result in silver prices skyrocketing.
2016 could be great for silver investors.