Summa Silver Corp. (TSXV: SSVR, OTC: SSVRF, FRA: 48X)
Silver Lives Here
After former president Donald Trump declared victory in US election yesterday, the Federal Reserve as expected announced a 25 basis point interest rate cut on Thursday (November 7).
The prospect of Trump’s return to the White House has boosted bullish sentiment in the stock market, with economists predicting that a series of tax cuts under the new administration will help boost economic growth and corporate earnings. This is even more good news for the precious metal silver, as half of its demand comes from industrial applications.
Julian Wee, financial markets strategist at UBS, wrote in a note to clients today: “Gold remains the preferred hedge for investors, but going forward, investors need to strike a greater balance between defensiveness and economic growth. This creates opportunities for silver as it is not only able to attract some safe-haven demand, but also better positioned to benefit from expanding industrial demand.”
Silver prices hit a near 12-year high of $34 an ounce in late October, outpacing gold’s year-to-date gains. Citi Research has since raised its 6-12 month forecast for silver prices to $40 an ounce from $38.
Analysts at UBS note that after briefly hitting 73 in May, the ratio between gold and silver rose above 85:1 in September. “Nonetheless, we continue to believe that silver will benefit from a rising gold price environment, including the Fed’s easing of interest rate policy,” analysts said in the note. “We expect the silver market to remain in short supply over the next few years, which means that above-ground inventories will continue to fall, which will help to fundamentally support prices and boost investor interest.”
Analysts expect silver to outperform gold over the next 12 months, with the ratio likely to test its long-term average below 70. Investors are warned that after several months of one-side gains, gold prices are due for a near-term correction. The recent rise is based on expectations of Trump winning the US presidential election, trade tariffs, rising US fiscal deficits, a possible slowdown in GDP growth, and rising inflation.
Recent US data suggested that a “no-landing” situation is more likely to occur than a “soft landing” scenario which was expected previously, with moderate GDP growth, inflation close to the Fed’s target and growth at or above trend.
In addition, lower interest rates, especially in China, are expected to kick-start a modest recovery in global manufacturing, which will increase silver’s industrial demand potential, including heavy use of silver in technology and electric vehicles, steady demand for led and solar panel production, and applications in the medical sector due to silver’s antibacterial properties.
UBS analysts predict silver will reach $36- $38 an ounce by 2025.
Meanwhile, analysts at InvestingHaven issued a more bullish note this week, saying that “Silver will test its previous all-time high ahead of 2025, and make new highs between 2026 and 2027.” The analyst gave bullish price targets of “$50 by 2025” and “$77 by 2028,” adding that “peak silver prices are expected to exceed $82 per ounce by 2030.”
