Silver Institute Report Calls for $19 Silver

01 May

Silver Institute Report Calls for $19 Silver

The Gold-Silver Ratio Reaches Unprecedented Highs During Shutdown!

The Silver Institute, a trade association has released its annual report on silver, the World Silver Survey.

The report, produced for the Institute by a private research firm, forecasts the silver price to reach $19 this year.  That represents an increase of 20 percent over the next 8 months.  

We think that factoring in off-the-charts spending and money printing by the government, that forecast is conservative, substantially understating the upside for silver this year.  Our view is colored by our long experience of watching silver dramatically out-perform gold in bull markets gone by.

The challenges for the 2020 Silver Institute report was incorporating unknowns about the effects of the COVID-19 pandemics into its forecasts.

Factoring in what is known about virus-driven mine shutdowns, along with other projections, it concludes that new mine silver production will fall by 5 percent this year, with overall global supply falling by 4 percent. 

In then looks to the shutdown’s impact on end-users, including silverware and jewelry.  Not surprisingly, it expects industrial fabrication to fall by 7 percent, “as a result of lower visitors to retail stores and the appetite for discretionary spending taking a hit.”

silver to gold ratio May 2017

The offset is “strong interest in silver from retail investors.”  The report forecasts a significant 16 percent increase in investor demand for silver bars and coins.  

Strong demand from institutional investors will contribute to higher silver prices this year, as well.  The report cites stimulus measures (that would be deficit spending by governments and central bank money printing), negative interest rates, and the other global macroeconomic concerns that will drive institutional silver buying.  

The report also notes the historically high gold-silver ratio, which suggests that on a historical basis silver is hugely undervalued compared to gold.  The ratio as we write this is about 113 to one, meaning that silver is so inexpensive that it takes 113 ounces to equal one ounce of gold.

A gold-silver ratio is this stratospheric range is simply unprecedented in all history.  As you can see from the five-year chart above, the ratio catapulted in this range with the pandemic shutdown, and even briefly touched 125 to one in March.  

The World Silver Survey takes note of this anomaly, which will prompt additional investor inflow into silver.  Stated differently, “silver should also benefit from bargain hunting, on the back of its historically low relative value compared to gold.”

Finally, one commentator, echoing the call by Bank of America earlier this month for much higher gold prices, notes drily, “They can’t print silver, either!”

Speak with your Republic Monetary Exchange professional today about silver’s place in your portfolio for both profit and protection.