I’m really bullish on gold. But I’m even more bullish on silver. The market is pretty sure that the Fed is done hiking, and the next thing it will do is cut rates. This optimism is lighting a fire under gold and silver, which are held back by higher rates because the metals don’t pay interest. Consider the iShares Silver Trust (SLV) and the Global X Silver Miners ETF (SIL), writes Sean Brodrick, editor at Weiss Ratings Daily.
Plus, the revised Fed outlook comes on top of the existing drivers for precious metals: Tight supply, increased demand from the world’s central banks, surging demand in China, and fears of runaway spending by the US federal government.
A record 654.4 million troy ounces of silver were used in industrial applications in 2023. That was part of a larger 1.195-million-ounce total demand, according to data from the Silver Institute. Driving that demand is silver’s increasing use in electronics, including electric batteries, solar panels, chemicals, and more. The Silver Institute also expects that silver will be incorporated into more AI technologies. That could light the fuse on demand and prices.
Data by YCharts
While AI demand is longer term, just in 2024 the Silver Institute is forecasting total silver demand to rise 2% to 1.219 million ounces. Meanwhile, global silver mine production fell 1% last year to 830.5 million troy ounces. That’s thanks to labor actions at mines, lower grades overall, and some mine closures in Argentina, Australia, and Russia.
It would have been worse if not for increased supply from Chile and Bolivia, as well as more recycling. Result: The Silver Institute says that in 2024, we could see the second-biggest deficit in the silver market in 20 years. Above-ground stockpiles will make up the difference, at least for a while. But add increased demand to less supply, and it sure looks like we have the potential for a squeeze in silver prices.
It would not surprise me to see the price of silver QUADRUPLE over the next few years. Along with it being the most useful of metals, we’re probably heading to a currency crisis eventually, driven there by a combination of uncontrolled government spending and demographics.
That means the opportunity in silver miners could be extraordinary. You can drill down into SIL and buy individual stocks for potential outperformance. Or you can just buy this basket of stocks and do pretty well. The choice is yours. But don’t let the golden opportunity in silver pass you by.
Recommended Action: Buy SLV and SIL.
