Commodity Bulls Are Encouraged by $2300 Gold, Silver And Copper Gaining Momentum

Published on: Apr 6, 2024
Author: Caroline Kong

Gold price broke the $2,300 resistance level for the first time and hitting a new all-time high once again this past week, followed by silver, which also shook off quite a long period of bottoming near $25, topping $27 per ounce in Friday’s trade.

In fact, at last month’s 2024 PDAC Conference in Canada, many gold mining companies executives and analysts unanimously believed that the price of gold would rise to $2300 this year, but no one expected this target to be achieved so quickly.

In a recent revised 2024 precious metals outlook released by MKS Pamp, the Swiss precious metals giant stated that the previously perceived ceiling for the price of gold now seems to have turned into a new support, as central banks and investors’ physical demand for gold remains unabated, indicating that the price of gold will continue to rise in the future. The report noted that the rise of gold during the central bank rate-cutting cycle is representative, and 2024 will be a year of bull market gains for precious metals.

It is worth noting that the price of copper also climbed to its highest level in 14 months this week. Despite lingering doubts about the prospects for China’s economic recovery, copper, as one of the key metals for energy transition, is attracting more investors’ attention. John Ciampaglia of Sprott Asset Management stated that he would not be surprised if copper prices rise by 10% to 20% in the next 6 to 12 months.

As for silver, amid the collective rate-cutting cycle by central banks, the micro/fundamental story of silver remains compelling (as is the case for copper and platinum). Analysts acknowledge that in a high-interest-rate environment, investors are not patient enough to wait for silver prices to slowly rise, explaining why silver holdings are so low. However, it cannot be denied that supply constraints will continue to push prices higher.

Over the past three years (including 2024), the silver market has experienced an average shortage of approximately 250 million ounces. One of the reasons for silver’s underperformance compared to gold is that central banks around the world do not purchase silver, while gold continues to be the ultimate monetary metal in the global financial markets, making it the preferred hedge against uncertainty and volatility.

Daniel Ghali, a commodities analyst at TD Securities, stated that energy transition is the investment trend of the decade, and the role of silver is often overlooked. For years, market participants have generally believed that the vast above-ground silver inventories are sufficient to meet any reasonable level of demand growth. However, today, there is a possibility that this assumption may be challenged in the next 12-24 months.

Matt Watson, the founder of Precious Metals Commodity Management LLC, mentioned that silver is increasingly becoming an industrial and power metal, and silver production has not increased since 2005. Considering the irreplaceable role of silver in the solar energy, electric vehicles, and renewable energy sectors, silver price of over $20 is certainly unsustainable.

If you’re interested in investing in silver, you might want to keep an eye on this company: Silver Storm Mining Ltd. (TSXV:SVRS). Silver Storm Mining Ltd. holds advanced-stage silver projects located in Durango, Mexico. Golden Tag recently completed the acquisition of 100% of the La Parrilla Silver Mine Complex, a prolific operation which is comprised of a 2,000 tpd mill as well as five underground mines and an open pit that collectively produced 34.3 million silver-equivalent ounces between 2005 and 2019. The Company also holds a 100% interest in the San Diego Project, which is among the largest undeveloped silver assets in Mexico.

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