(VIDEO) Why the Math Behind Silver Supports a $300 Price Target
Silver price to $300. That’s not my number. That’s Bank of America’s.
Michael Whitmer, head of metals research at Bank of America, recently stated that silver prices could rise to between $135 and $39. The people over at Bank of America aren’t the only ones making forecasts like this. In fact, we told you all about it back in September.
If gold climbs to $5,000, which many analysts now see as the next price target at a normal gold to silver ratio, that would put silver at around $100. So, $100 silver is not the finish line. History shows that may only be the starting point.
Why the Math Matters
I’ve been walking you through the math for months now. The math is so clear that Bank of America can publish it. Why are they catching up? Because math doesn’t lie.
I learned arithmetic a long time ago. Then I taught my kids. Now I’m teaching my grandkids. What’s interesting is how little things change. 2 + 2 equals 4. It always has and it always will.
Sometimes I like to tease them and say 2 + 2 equals 5 and they look at me like I’ve lost my mind because they understand something so simple. Numbers don’t care what you want them to be.
Now, if you understood the math with silver, you would see something that the majority of people are missing. Stay with me because this is where it gets interesting.
Silver’s Supply and Demand Problem
I can go pretty deep on silver, sometimes too deep. There’s so much data that’s pointing to a silver super cycle right now. ETFs, global central bank buying, the gold to silver ratio, currencies — and that’s usually where these conversations go.
Today, we’re going to take things one step further because what’s driving this next movement is actually more simple. In this case, 2 + 2 + 2 + 2 + 2 doesn’t equal four.
The supply is limited. And when you keep adding demand, the math stops working. Even my grandkids could tell you it doesn’t add up.
A New Demand Force: Batteries
And on top of everything we just spoke about, there’s a new demand force coming into the picture. Batteries.
Most batteries on the road today are still lithium ion, and they use little to no silver. That’s important because it’s why silver demand from batteries stayed manageable for so long.
But the designs automakers are committing to next are different. And this is where the math starts to change. In this new design, silver isn’t optional. It’s how the battery works.
Automakers are retooling production lines to produce millions of vehicles with this new battery.
When Demand Rises but Supply Doesn’t
And here’s where the math matters. When silver moves from being optional to being required across millions of units, the demand increases instantly. But the problem is silver supply doesn’t increase with it.
Most silver is mined as a byproduct of other metals. Output adjusts slowly and unevenly. We’re currently in an environment where demand has exceeded supply for 5 years in a row.
So what happens when we add even more demand to the equation? You can’t just turn on new silver production because battery chemistry changed.
Bottlenecks, Pressure, and Price
Think of four assembly lines pulling from the same pool: electronics, energy storage, investment demand, and automotive. Same metal, same supply.
When total demand exceeds available supply, there’s no way to divide it evenly. Someone waits, someone gets prioritized, everyone pays more.
That brings us back to the silver price predictions. Analysts aren’t modeling one price, they’re modeling pressure. That’s why the range runs from $135 all the way to $39 — because in markets like this, the math tells you where stress begins.
Why This Matters Now
We’ve talked about the math. There’s more demand than supply. We’ve been in deficits for 5 years in a row with increasing demand coming.
What does that mean? That’s how bottlenecks are formed. That’s how a silver super cycle could just bust out. Because at the end of the day, math doesn’t lie.
Take the Next Step
If you want to understand how these trends could impact physical gold and silver ownership, you can sign up for a one-on-one web conference with Augusta Precious Metals.
No commissions. No pressure. Just education.
Learn more and reserve your spot by visiting this one-on-one web conference with Augusta Precious Metals.
During a three-decade financial services and economics career, Devlyn Steele has processed financial assets worth more than $2 billion. As Augusta’s director of education, Mr. Steele now leads an education team dedicated to enlightening fiscally conservative Americans about savings diversification through alternative assets. In his pivotal role at Augusta, Devlyn reveals his insights about what’s happening behind the scenes in the economy and helps Americans diversify their savings to potentially offset economic concerns. His informative web conferences have attracted wealthy and successful customers. Mr. Steele is a member of the prestigious business analytics program at Harvard Business School.
