Silver, like Gold, has been a unit of currency for over 5000 years. Everyone has heard of Long John Silver and his treasure, especially his parrot's favourite saying "Pieces of Eight" so Silver has been revered for centuries but as a monetary metal it hasn't kept pace with Gold and some experts say that for many years over 40, in fact - its prices has been suppressed by Big Banks and institutions who have been entrusted to keep it. Those days seem to have ended somewhat and the metal is in true price discovery mode. That's not to say that it can only grow in value; like all commodities, prices rise and fall and the past is no guide to the future performance. Historically, the price movement in Silver has been much more volatile than Gold too.
Silver is in a fairly unique position in the commodities sector as not only is it a Monetary Metal, like we have already said but it is also an Industrial Metal, which some would say Silver is the most important commodity in the World right now ahead of Coal and even Oil. The reason being mainly: The AI revolution. Silver is the most reflective material on the periodic table; it is also the most electronically conductive; it dissipates heat better than any other metal; it's not susceptible to corrosion and it's incredibly antibacterial. Therefore, its essential for the buildout of Data Centres for one and it has way more modern world industrial uses than any other commodity in existence.
Every Data Centre, Solar Panel, Electric Vehicle, Mobile Phone, 5G Infrastructure, Satellite, Rocket, Battery and even Driverless Cabs and Humanoid Robots can use vast quantities, and the list doesn't even end there Medical Instruments/Implants and even Yoga Pants/Cycling Shorts now have Silver in them days to help kill germs.
As a result and as 2027 fast approaches we are heading into the 7th year of Supply Deficit which is to say we are consuming more Silver each year to the tune of around 200,000,000oz + than is being mined at approximately 850,000,000oz each year.
On the face of it this problems sounds easy to fix just build more mines but as it stands there are only around 45 silver mines in the World and 16 of those are closing this year but the majority of Silver is actually produced as a bi-product of Gold, Copper, Lead and Zinc Mining . Again though, I hear you say open up more mines! well currently it take 6-9 years to bring a mine online from discovery to production due to all the permits and governmental approvals required and there's the further complication that its only really been the last 2 years that Silver Mining has been profitable due to the very low Silver Prices compared to other metals so not many people have been actively seeking new discoveries.
This may not sound like a huge problem at the moment, but with big ambitious companies like SpaceX and Tesla having very ambitious and world's first projects the quantities required for these rollouts and extra consumption could lead to hundreds of millions of extra ozs being required every year in the very near future.
So what does this mean for the investor or collector of physical silver? Well, the supply and demand ideology would suggest that prices will increase and if, in the most bullish of cases should occur, some experts say the price could rise to as high as $1000-1300per oz. Do we actually expect this to happen in the short term? No, but no one can be certain. From today's prices of just over $60 per oz there is massive potential as seen earlier this year when prices quickly rose to over $120 per oz.
There is also another way to gauge the price discovery. right now this is known as the the Gold Silver Ratio which sits around 70oz of Silver to 1oz of Gold historically its been as high as 120oz to 1oz and as low as 15oz to 1 and to give you a reference point it is mined out of the ground at a ratio of around 6/8oz of Silver to 1oz of Gold so should the Big Tech Companies Central Banks and Retail Investors like yourself all converge on Silver "the Silver Squeeze" could actually materialise and the price movement could be enormous but as with anything what goes up can come down just as fast so there's no sure fire bets here but one thing is for certain having some Silver in your portfolio could be a very wise and worth while investment strategy.
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This information is provided as just that information; nothing written above constitutes financial advice.
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