Silver Markets Are Destined For Massive Gains by Nathan Mcdonald, Sprott Money
Silver, at this current time of writing, remains below $15.00 per ounce; it is sitting at $14.76. This price is absurdly cheap given the current state of the global economy and the uncertainty that the world now faces.
One of the main reasons for silver being so depressed compared to the resilience that gold has shown is the incredible range of uses that silver has in the manufacturing of a vast number of products. This is a topic that we have covered here in the past that highlights why silver, with its dual purpose as both an industrial and monetary commodity, make it so desirable now and in the future.
David Einhorn's Greenlight Capital funds were up 11.9% for 2021, compared to the S&P 500's 28.7% return. Since its inception in May 1996, Greenlight has returned 1,882.6% cumulatively and 12.3% net on an annualized basis. Q4 2021 hedge fund letters, conferences and more The fund was up 18.6% for the fourth quarter, with almost all Read More
With the global economy slowing down, so too has silver crashed, along with most other commodities. This has provided a unique opportunity for those of us who value silver as a monetary metal to accumulate it at insanely cheap prices given its current completely out-of-whack gold-to-silver ratio, a ratio that is screaming at the top of its lungs that silver is the steal of the century.
Resting at nearly 84:1, this is one of the highest gold-to-silver ratios that we have ever seen. Typically, throughout history, this ratio has rested at 16:1! What this is saying is that either gold is currently very overpriced, which is not the case – if anything, gold is still a relatively good price given the dangerous precipice we now find ourselves on – or silver is horribly under-priced and is destined to rocket higher in the future.
The latter of the previous two scenarios is the outcome that I am guessing will come to fruition. Silver mines are beginning to shut down due to low prices, which will inevitably lead to supply issues, given the massive physical demand that silver continues to see at these artificially depressed prices.
Mints around the globe have reported record silver sales and have even been forced to temporarily shut down sales multiple times over the past couple of years, indicating that 1) the price is too cheap, and 2) physical silver is in demand.
Another factor that barely anyone is talking about is how the silver mines that are still in production at these low prices have ramped up their mining operations to stay in business and to keep the cash flowing. They are selling their valuable asset for a fraction of its future value.
Yet this action is coming at a huge cost. As not only are they ramping up production, but in addition to this, they are mining their highest-grade product, ie, they are picking all of the low-hanging fruit to keep cost down and profitability up. This will come with a future cost that will force silver prices naturally higher.
Although it is incredibly hard to see at this time through all the gloom and doom surrounding the depressive silver markets, the future is inevitably bright. Silver will once again move higher when the time is right; all the fundamentals are backing this future rise in prices and it is only a matter of time before it takes place. Until then, take advantage of these low prices and keep stacking, my friends.
The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.