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Silver Prices Undervalued
Silver prices are gearing up to explode as the law of supply and demand is starting to flex it’s muscles. If you have not looked into investing in the shiny metal, now is probably a good time to do so. If you just look at the most basic factors of current prices, or any commodity for that matter, they suggest one of the greatest buying opportunities in the history of this precious metal. .
The supply and demand equation in the silver market is extremely distorted; supply is very limited whereas, demand is sky rocketing. Basic economics alone say this is a perfect recipe for an upturn in prices.
Silver Supply Side Continues To Get Crushed
Major silver production regions are reporting massive declines.
Consider the U.S. mine output. In the first seven months of 2015, U.S. mines produced 657,000 kilograms of silver. (Source: U.S. Geological Survey, last accessed October 5, 2015.) In the same period a year ago, U.S. mines produced 668,000 kilograms of the precious metal. (Source: U.S. Geological Survey, last accessed October 5, 2015.) This represents a decline of over 1.6% in silver output in the U.S. year-over-year.
Something to keep in mind; the U.S. is among the top 10 producers of silver.
Canada is reporting a massive decline in production as well. Between January and July of this year, mining output in Canada amounted to 227,860 kilograms. In the same period a year ago, this figure was 287,857 kilograms. (Source: Natural Resources Canada, last accessed October 5, 2015.) In other words; silver production in Canada has declined close to 21%!
Silver Demand Surging
Supply in the market isn’t the only factor that suggests prices are setting up for massive rewards. Demand figures are very encouraging, too. Silver has the unique advantage over gold as having many uses besides being a precious metal such as Medicinal and Industrial.. What has been really encouraging as of late is the demand for bullion. A venture over to the APMEX website will attest to that fact. Many of the sites 1 Ounce bullion are back ordered or completely out of stock. One good example of this is the Mexican Libertad.
Furthermore, consider this; in the first nine months of 2015, the U.S. Mint has sold 36.05 million ounces of American Eagle coins. In the same period a year ago, the U.S. Mint sold just 32.31 million. This means an increase of over 11.5%. (Source: U.S. Mint, last accessed October 5, 2015.)
Mind you, not too long ago, the U.S. Mint halted sales of these coins due to inventory shortages of blanks inhibiting them from meeting demands.
Also notable is the recent interest China and India have been expressing for Silver —For instance, India, the country famous for it’s dowry buying of gold, is importing it’s little bother “Silver at unprecedented levels. For instance, in August $363.41 million worth of silver was imported into India. In the same period a year ago, it was $245.16 million. This represents an increase of over 48% year-over-year. (Source: India Ministry of Commerce & Industry, last accessed October 5, 2015.)
Silver Price Outlook for 2016
We just have a couple of months until 2015 ends. Don’t be surprised to see a major breakout by December or early 2016. With prices holding the $14.50 level fairly strong and at a $16 point as I write, it’s inevitable silver will soar to new heights. No matter how much and how hard a commodity price is manipulated, the law of supple and demand always prevails eventually. In my opinion, we may never see prices this low again thus, an excellent buying opportunity for those that believe in tangible assets.
Chart courtesy of www.StockCharts.com