Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
On Tuesday, Daniel Ghali, Senior Commodity Strategist at TD Securities, expressed continued optimism about the outlook for silver, citing that physical demand for the metal remains higher than supply. He further noted that silver prices have held above the initial support level of $31 per ounce, indicating a potential major breakthrough.
This week, silver prices surpassed the $32 mark, reaching a high of $32.5085 per ounce, marking an 11-year high. Notably, while gold has garnered more attention, silver’s year-to-date gains have outpaced gold, with gold appreciating more than 18% and silver soaring over 36%, twice the rate of gold’s increase. This trend, Ghali suggests, could continue.
Ghali mentioned that the last time silver broke through the $30 level, it surged to $50 per ounce in less than 10 weeks. The recent upward drive in silver prices has been attributed to a resurgence in investor demand, which Ghali believes will exacerbate the shortage of this precious metal, thus providing it with long-term support.
A breakout above $30 per ounce could trigger significant ETF buying, further depleting the ‘free-floating’ inventories on the LBMA. The last viral wave of the “silver squeeze” meme on social media spurred approximately 110 million ounces of ETF silver demand in just a few days. If a similar scenario were to occur today, it could reduce the inventory by 35%.
TD Securities remains long-term bullish on silver, anticipating that industrial demand will lead to a significant market deficit again. In a report published last month, TD Securities noted that sustained demand growth could deplete substantial above-ground stocks within 12 to 24 months. Unlike gold, silver often displays strong commodity and industrial properties, making supply and demand factors, particularly inventory data, highly influential on silver prices.
Also last month, the Silver Institute, in its annual “World Silver Survey” report, highlighted that global silver supply and demand deficit is expected to increase significantly by 17% to 215.3 million ounces in 2024, the second highest in over 20 years, largely driven by robust industrial demand for silver. Silver’s downstream demand encompasses industrial applications, investments, jewelry, and silverware, with industrial demand accounting for more than half, especially with the ongoing growth in photovoltaics demand. On the supply side, achieving significant increments is challenging, which supports the fundamental basis for a rise in silver prices.
Despite the sharp rise in silver prices in recent days, some analysts argue that the market is just getting started as it plays catch up to gold. Simultaneously, as silver has recently outperformed other precious metals, the gold-to-silver ratio has fallen to 75, the lowest since December 2022. Historical data shows that over the last 100 years, the gold-to-silver ratio has maintained a relatively stable range with an average of 47, expanding to nearly 60 over the last 30 years.
