INVESTING IN SILVER IN 2018 - SILVER MARKET ANALYSIS | Summary and Q&A

TL;DR

Silver market shows potential investment opportunities due to low prices, industrial demand, and potential for high volatility.

Key Insights

• 🥈 The cost of mining silver suggests a potential bottom price of around $14 per ounce, with limited downside risk.
• 🏅 The gold-to-silver ratio is at historically high levels, indicating that silver may outperform gold in the future.
• ✋ The silver market is smaller than the gold market, resulting in higher volatility.
• 🦔 Silver offers a potential hedge against loose monetary policies, which could drive demand and price increases.
• 🧑‍🏭 Consideration of silver mining investments should involve factors such as mining costs, jurisdiction, and development phase.
• 🦔 Physical silver can serve as a hedge and diversification in an investment portfolio.

Transcript

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Questions & Answers

Q: How has the price of silver changed compared to gold in recent years?

The price of silver has experienced a bigger crash than gold, declining from an average of $45-40 per ounce in the 2010-2013 period to $16 currently. Gold, on the other hand, has only declined 40% from its peak.

Q: What is the primary driver of demand for silver?

The main demand for silver comes from industrial applications. However, there is also demand from the solar electricity generation field, jewelry, silverware, and coins and bars.

Q: How did the demand for coins and bars change during the financial crisis?

Coin and bar demand dropped during the 2009 crisis as people sought liquidity. However, demand reached its highest point in 2015 when there was ample liquidity and silver prices were cheap.

Q: What role do exchange-traded products play in the silver market?

Exchange-traded products (ETPs) and their inventory can have an impact on the price of silver. When there is more speculation and demand for ETPs, it can spike the price of silver.

Summary & Key Takeaways

• The price of silver has experienced significant fluctuations, from $4-5 per ounce in the 1990s to nearly $50 in 2011, and now resting at $16. Compared to gold, silver has experienced a bigger crash.

• There have been more deficits than surpluses in the silver market, indicating a higher demand than what mines can produce. The deficit was 40 million ounces in 2016, and 2017 data is eagerly awaited.

• Silver demand comes primarily from industrial applications, but there are also demand from the solar electricity generation field, jewelry, silverware, and coins and bars.