BY ORDERING YOUR FREE GUIDE
Complete the form now...
After covering silver price extensively in the previous two blog articles, I first thought I might give it a rest this week. But silver isn’t done making news. Not discussing it again this week would be tantamount to dereliction of duty.
Actually, both gold and silver prices are doing well. If you own precious metals at all, you probably own gold for sure. If so, you’re no doubt pleased with what gold has been doing for some time. A sustained move upward that began in Q4 2018 has enjoyed additional energy recently courtesy of the Federal Reserve. The Fed’s declared policy of unlimited quantitative easing (QE) has been music to the ears of gold. It had a strong second quarter, rising 13% from April to June. And since the beginning of the third quarter, it’s already up another 6%.
But the real news of the day is silver price. In recent articles, I’ve referenced silver’s stupendous 32% jump in the second quarter. Late to the party, but certainly a piece of news worth crowing about. More than that, this recent performance raises the possibility of an epic run by silver this year – and maybe much longer. Now we’re only a little more than three weeks into the new quarter and the silver price has jumped another 27%.
As much as silver’s price has gone up recently, experts are saying it may have a lot more room to run.
Continued Demand for Silver Expected to Send Price “Much Higher”
Last week, I mentioned the record inflows of silver to exchange-traded products (ETPs) this year. About 196 million ounces of silver made their way into ETPs in just the first six months of 2020. To appreciate how extraordinary that is, note the highest annual total inflow – up to this year, anyway – has been 149 million ounces. That occurred back in 2009, when the Great Recession was in full swing.
Experts agree the spark for silver is rooted in the metal’s dual properties of safe-haven asset and industrial demand. This duality allows silver to benefit from massive QE in a way that’s unavailable to other precious metals. When the Federal Reserve throws the kitchen sink at a weak economy, the action raises fears of dollar debasement. Simultaneously, the aggressive moves by the Fed also help businesses by encouraging lending and investment. That’s a near-perfect formula for stronger silver, if you’re judging by silver’s historical performances.
Peter Grosskopf, CEO of global asset manager Sprott, says the industrial demand “premium” of silver that exists alongside its safe-haven appeal is the key to what we’re seeing. Speaking recently to MarketWatch, Grosskopf also said “a wave of investment demand to push the price much higher” is benefitting the metal presently.
Senior analyst Jim Wyckoff of Kitco also cites silver’s rapidly growing industrial demand as a big reason it’s flying high. Wyckoff told MarketWatch that improving Chinese and U.S. economies are providing silver prices with an especially strong boost right now.
Analyst: All-Time High for Silver Price “Not Out of Reach”
Wyckoff also sees “much more upside potential” in silver prices. Gold is not far off its all-time high of 1,920 dollars per ounce reached in 2011. But the price of silver has a way to go before breaching its record high of just under 50 dollars per ounce. The analyst believes that differential is yielding additional dividends to silver in the form of market perception. In other words, prospective metals buyers could start to balk at gold as it nears its record price. However, silver still could appear to be “undervalued” by those same buyers, according to Wyckoff. He thinks a new all-time high for silver’s price is not only “not out of reach” but could be realized “much sooner than anybody thinks.”
It’s worth reiterating how similar the environment for silver is right now to the one that existed during the 2008 financial crisis. In its effort to help stabilize the economy, the Federal Reserve introduced the first two rounds of QE in 2008 and 2010. Also, in years 2009, 2010 and 2011, Washington ran the three highest annual federal deficits in history (up to that point). Against this backdrop, silver price soared nearly 400% from 2008 to 2011. Then-record spending by the government along with then-unprecedented Fed asset purchases paved the way for the silver price to respond as it did. We basically are seeing the same silver-friendly environment take shape today.
Augusta Precious Metals senior economic analyst Devlyn Steele has been paying particular attention to silver pricing for some time. When it appeared silver was ready to make its move, Steele recorded a special six-video series titled “Today’s Silver Boom.” In the presentations, he details why discerning retirement savers want to give physical silver an especially close look right now. Steele cites the beneficial economic conditions noted by other analysts. He also points to an ideal outlook for the closely watched gold-to-silver price ratio as another reason silver could reach record heights.
The ratio’s present value is roughly 81, putting it well above the current millennium’s average of 60. According to Steele, this condition suggests silver could be greatly undervalued, and silver prices could be looking at even greater gains than already achieved. Should the ratio revert to or below the mean, silver owners could be in store for tremendous gains. As a matter of fact, Steele thinks the silver price could go as high as 55 dollars per ounce within the next two years.
Will I be addressing silver price yet again next week? It’s certainly possible. Both silver and gold are roaring right now, and gold has been acquitting itself nicely for some time. But as silver price continues to rise by leaps and bounds, it’s the bigger story at the moment. Are you a retirement saver whose portfolio contains no silver? If so, now could be the time for you to add a little physical silver to your holdings.