This Is Why You Should Be Bullish on Silver Prices
Silver prices continue to show resilience, but don’t think returns are stretched. In the long term, silver prices could soar even higher. I wouldn’t rule out $50.00-an-ounce silver just yet.
I cannot stress this enough: one of the biggest factors you should pay attention to when looking at silver prices is demand. If you see the data on silver demand, it looks like there’s a silver rush in play.
Consider the sales of silver at the U.S. Mint, for example. In the first five months of 2016, the mint sold more than 23.4 million ounces of silver in American Eagle coins. In the same period a year ago, this figure was 16.9 million ounces. (Source: “Bullion Sales/Mintage Figures,” U.S. Mint, last accessed June 13, 2016.)
I call this my “magic” number.
In simple words, demand for silver at the U.S. Mint is surging by roughly 40%!
And as it has been mentioned in these pages over and over again, silver sales at other major mints are skyrocketing as well. Take the Perth Mint, for example, Australia’s major mint. Between January and May, the Perth Mint’s silver sales surged 164.4% compared to the same period a year ago. (Source: “Perth Mint Gold and Silver Bullion Sales in May,” CoinNews.net, June 3, 2016.)
Look at India, as well. A country known for its gold demand, India is building up appetite for silver, too. In April 2016 alone, the country imported close to $219 million worth of silver. (Source: “Quick Estimates For Selected Major Commodities For April 2016,” India Ministry of Commerce and Industry, last accessed June 13, 2016.)
The $219 million worth of silver may sound small, but it amounts to roughly 12.8 million ounces, or about 400 tonnes.
You also must remember that the silver market is significantly smaller than the gold and other markets.
But, this is just the investment demand…
Silver has many industrial uses as well and it looks like things are looking great on the manufacturing front—silver demand is expected to increase here, too.
According to a report by Transparency Market Research, a leading research and consulting services company, the global nanosilver market is expected to hit $2.4 billion by 2023. In 2014, this figure was just $700.9 million. (Source: “Silver News,” Silver Institute, last accessed June 13, 2016.) This represents an increase of 242.41% over the next few years.
Nanosilver is essentially minute silver particles used in healthcare products, electrical and electronic manufacturing, food and beverages, water treatment, and other areas.
This Is How Silver Prices Will Hit $50.00
Looking at all this, it’s very hard to be pessimistic toward silver prices going forward.
I ask you one question: what do you get when the demand is surging and supply, at the very best, is questionable?
Much higher silver prices could be ahead. This phenomenon could actually shock the silver market and send silver prices skyrocketing. I am not ruling out $50.00 silver prices.
With all this said, investors must pay attention to silver mining companies. Surely, owning silver bullion will mean big returns if silver prices soar to $50.00 (an approximately 194% return). However, silver mining companies can provide much bigger returns.
Year-to-date, silver prices are up roughly 25%. Some quality silver stocks I closely follow have even seen four to eight times that return! Quality silver mining companies are definitely worth keeping an eye on.