Two Countries Are Driving the Demand for Silver
India and China are known as major gold-consuming countries. But we are seeing them build a strong appetite for silver too. If that demand continues, it could lead to soaring silver prices.
In August alone, India imported $269.5 million worth of silver, which is almost 107% more than India imported in August 2016, when only $130.3 million worth of silver was imported into India. (Source: “Quick Estimates For Selected Major Commodities For August 2017,” Government of India Ministry of Commerce and Industry, last accessed September 18, 2017.)
Assuming silver prices of about $16.50 an ounce in August, India imported roughly 16.3 million troy ounces of the metal, equivalent to almost 508 tonnes. That’s a lot of silver.
China is buying massive of amounts of silver as well. According to trade data compiled by Commerzbank, in May, China imported 407 tonnes of silver. This was almost twice as much as in May 2016, and the highest amount since December 2010! (Source: “Commerzbank: China’s Monthly Silver Imports Highest Since 2010,” Kitco Metals Inc., June 23, 2017.)
With gold bullion prices up 16% this year, Indian and Chinese consumers could be setting their eyes on “poor man’s gold”—silver.
In China, an ounce of gold costs around 8,600 yuan. The price of gold has increased about 26% from its 2015 low, and currently stands at its highest price since May 2013.
In India, an ounce of gold costs around 83,900 rupees.
I will make a bold statement: ignoring silver prices could be a big mistake. The heavy buying of silver in India and China make silver an even better opportunity for investors. I see this as one of those situations in which investors, years from now, will look back to 2017 and say, “I should have bought more silver!”
Percentage-wise, silver prices could significantly outperform gold prices over the next 24–36 months. While I expect gold prices to more than double from here, I wouldn’t be shocked to see silver prices reach $50.00 an ounce. That’s 200% higher than where silver prices sit today.