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The price of gold hit an all-time high of more than $2,470 per ounce this week, while at the same time, silver prices continued to hover around $30 per ounce.
Market participants believe that silver, with its dual attributes of being a precious metal and an industrial metal, tends to lag behind gold in its upward trend. In addition, the silver market is in a supply deficit and its upside potential is being ignored by traders and institutional investors.
Keith Neumeyer, CEO of First Majestic Silver, said this week that manipulation of the silver market still exists, mainly from the trading arms of major banks, who see silver only as a number on a screen, often ignoring its fundamental value and significance.
According to the Silver Institute’s report, the global silver deficit is expected to increase by 17 per cent to 215.3 million ounces as of mid-July 2024, mainly due to a 2 per cent increase in industrial demand and a 1 per cent decline in supply.
According to the Silver Institute, the silver market has been experiencing a structural shortage for four consecutive years, with the current shortfall standing at 240 million ounces. This shortfall is significant given that the global mining industry only produces around 850 million ounces per year.
Neumeyer expects the deficit in the silver market to grow, fuelled by growing industrial consumption. He adds that it doesn’t really make sense that large institutions such as the Canadian Pension Plan don’t take large positions in silver or mining equities, despite such a large deficit.
The large institutions that are supposed to be supporting the silver market aren’t getting involved, causing the price of silver to run at the bottom for years, and that won’t last forever.
As for whether the price of silver will rise to the triple-digit levels he previously predicted, Neumeyer said, ‘Given silver’s important role in the green energy revolution and other industrial applications, we may be in the midst of yet another bull market in commodities, and investors should give serious consideration to the opportunities in the silver space.’
