Price of Silver Could Double & Still Be Undervalued
The financial world and mainstream media have been buzzing about topics like Bitcoin and Tesla Inc (NASDAQ:TSLA) lately. But there’s one asset that’s quietly getting bought. Investors should start paying attention to silver.
Silver prices could double and still be undervalued. The upside on the gray precious metal could be immense, and those who ignore it could be making a big mistake.
Just look at the sales of silver at mints around the world. Investors’ demand for the metal has been increasing, yet almost no one is talking about it. It almost feels like there’s a silver rush happening.
Consider the United States Mint. In 2020, it sold 30.1 million ounces of silver in American Eagle coins. In 2019, this figure was just 14.9 million ounces. (Source: “Bullion Sales,” United States Mint, last accessed January 19, 2021.)
That means, year-over-year, silver sales at the U.S. Mint have soared by more than 100%.
Look at other mints around the world as well; they’ve also seen a massive spike in the demand for silver.
Perth Mint, Australia’s biggest mint, reported its sales figures for the first 11 months of 2020 not too long ago. In that period, it sold 15.5 million ounces of silver. That was 51.9% higher than in the same period of 2019. (Source: “Perth Mint Bullion Sales in November Steady for Silver and Strong for Gold,” CoinNews.net, December 11, 2020.)
You might also want to look at the premiums for silver at precious metal dealers. These days, you’re paying 20–30% extra in some cases. This indicates there are shortages and demand is robust.
Furthermore, look beyond the mints.
Pay attention to the silver bullion held in silver-backed exchange-traded funds (ETFs). As per the most recent data, iShares Silver Trust (NYSEARCA:SLV) held 553.6 million ounces of silver. Over the past few months, this ETF’s silver holdings have increased by a large amount. (Source: “iShares Silver Trust,” iShares, last accessed January 19, 2021.)
Silver Price Outlook for 2021 & Beyond
Right now, there’s a very big disconnect between silver prices and the fundamentals of the silver market.
Basic economics say, when demand for something increases and its supply is subdued, its price goes up. The silver market has been witnessing a consistent increase in demand for a few years, while the supply side has been struggling.
Know that the COVID-19 pandemic has been a money-destruction event; there’s a reason why every asset you see has increased in value. Investors have been looking to get out of cash due to the belief that it’s going to lose a lot of value. However, they have ignored silver big-time.
I believe 2021 is setting up to be a great year for silver investors. The gray precious metal could make a serious run toward $50.00 this year. Don’t be shocked if it becomes one of the best-performing assets in 2021.
Over the past few weeks, the price of silver has come down a bit. That’s not because something has changed in the market; it’s only because of noise and the fear of missing out on other assets.
I’m watching silver miner stocks closely. It’s amazing how investors have ditched them. Silver miner stocks are offering great value, and could really pay off in 2021 and beyond.