This Could Send Silver Prices Soaring
When looking at silver bullion price forecasts, one prediction sticks out like a sore thumb. A Canadian miner called First Majestic Silver Corp (NYSE:AG) says the surge in smartphones and tablets is creating a shortage that could send silver prices up 775%.
Precious metals like silver are essential for electronics manufacturing. Demand for those metals has jumped in tandem with the spread of mobile devices, squeezing supply. Or at least that’s according to First Majestic CEO Keith Neumeyer.
Neumeyer says his firm was approached by a major Japanese electronics maker looking to secure its future shipments of silver. He says this is proof of a shortage. (Source: “Miner Sees Silver Price Surging Ninefold as Global Gadgets Boom,” Bloomberg, May 26, 2016.)
“For an electronics manufacturer to come directly to us—that tells me something is changing in the market,” said Neumeyer. “I think we’ll see three-digit silver.” (Source: Ibid.)
The highest peak reached by silver was $50.00 back in 2011. Most analysts think the grey metal will hit a ceiling around $57.00, but First Majestic claims there’s a trend few are paying attention to; apparently, this trend could send silver prices to $140.00 per ounce.
Neumeyer claims that silver is a “strategic metal” whose practical applications make it a highly sought-after commodity. It is not only insulation from economic uncertainty, but it is also an important factor in manufacturing. (Source: Ibid.)
“Silver is the most electrically conductive material on the planet other than gold,” said Neumeyer. “And gold is too expensive to use in circuit boards, solar panels, electric cars. As we electrify the planet, we require more and more silver. There’s no substitute for it.” (Source: Ibid.)
The broad strokes of this argument are clear. As people in developing parts of the world grow wealthier, they are going to start buying more electronics. Be it in China, India, or South Africa, people will pursue the quality of life we enjoy in North America.
They want smartphones, tablets, and laptops. Silver is key for them to achieve that lifestyle, but current production isn’t equipped to meet that demand. There is a supply shortage that is not reflected in the price of silver. That’s the argument.
Silver is currently trading at $16.36. It is one of the best-performing investments of the year, up 19% from the start of 2016, but Neumeyer and First Majestic are predicting returns on a different scale.
Their estimates point to 775% gains for anyone who buys silver at its current price.