Supply Side Tells a Bullish Tale for Silver Prices
Silver prices are being ignored for all the wrong reasons these days. The gray precious metal could be a lifetime opportunity in the making. This statement is going to sound bold, but silver could make a run for $50.00 once again.
You have to remember basic economics when looking at the price of silver; when the supply declines and the demand remains the same (or goes up), prices increase. This is exactly what we are seeing play out in the silver market right now.
The mainstream media is failing to report on this, but production in the major silver-producing regions is falling off a cliff.
Major Silver-Producing Regions Continue to Report Declines
Consider Mexico, the biggest silver-producing country in the world. In the first five months of 2017, mine production in the country amounted to 1,699 metric tons. (Source: “Mine production of silver in Mexico from 2010 to 2017 (in metric tons),” Statista, last accessed October 17, 2017.)
If you do the simple math, that’s roughly 339.8 metric tons on average each month, and—at this pace—Mexico is on track to produce 4,077.6 metric tons in 2017.
Go back a little. In 2016, Mexican mine production was 4,109.61 metric tons. In 2015, it was 4,959.38 metric tons.
See the trend here? The biggest silver mining region is witnessing declines. If 4,077.6 metric tons is the final production number for 2017, it would represent a decline by more than 17% in the past two years.
But, know this: Mexico isn’t the only silver mining hub showing production declines. Look at U.S. mine production figures as well. In the first six months of 2017, the U.S. silver mine output amounted to 536,000 kilograms. In the same period a year ago, U.S. mines produced 567,000 kilograms of the gray precious metal. (Source: “Mineral Industry Surveys,” U.S. Geological Survey, last accessed October 17, 2017.)
Year-over-year, in the first six months of 2017, Mexican silver mine production declined by 5.47%.
Canada is seeing something similar.
In the first seven months of 2017, Canadian silver mine output amounted to 223,265 kilograms. In the same period of 2016, silver production was 233,724 kilograms. That’s a decline of 4.47%. (Source: “Production of Canada’s Leading Minerals for July 2017,” Natural Resources Canada, last accessed October 17, 2017.)
Silver Prices Outlook: Ignore the Precious Metal and You Could Be Kicking Yourself Later
Dear reader, as I see it, silver is one of those assets that could really provide investors with solid returns over time. The fundamentals for the silver markets are nothing but remarkable.
Currently, investors are disregarding the most basic data. Once the data starts to matter, it wouldn’t be shocking to see those who have been ignoring the precious metal start to rush to buy it. This could create a massive spike in silver prices, and we could even see $50.00-an-ounce silver in the midst of all this.
Obviously, with time we will know more, but I can’t stress this enough: look at silver mining companies. They continue to sell for pennies on the dollar as silver remains ignored.