Many people banging the silver drum are likely to be frustrated by how silver appears mostly steady or in slight decline. Here we are, inflation banging on the door, and silver seems unable to break out of the mid-twenties in price: Silver dipped below $25 for the first time since March, holding at $24.84/oz.
But there are a few important things to consider. Notably, silver spent seven years floating between $14 and $18/oz. Its value surged nearly 50% in 2020. The fact that it is remaining relatively steady is proof the market is digesting its recent surge. Especially in the backdrop of all of the uncertainty brought about by last month’s Federal Open Committee Meeting, which sent almost every other precious metal tumbling for a few days.
It is also important to remember that the fundamentals for silver in the long term remain every bit as strong as they were back in February, when the metal nearly hit $30/oz. Silver is still looking down the barrel of a global shortage, with demand likely to rise thanks to its industrial uses in clean technology such as solar panels and electric cars.
As 5G towers become more prevalent, silver is going to be in demand there as well. 100 million ounces additional ounces of silver are projected to be needed to meet future demands and there is simply no way that mines are going to be able to cover that gap in the next 5-10 years.
Now is an Excellent Time to Add Silver
Silver is unlikely to remain below $25 for long, and its recent price dip makes it a good value grab. This month’s FOMC meeting is also underway, and might very well create some more turbulence in the space, especially if they come out as hawkish as they did last month.
However, if inflation fears show more evidence of bearing out of the Fed displays any degree of uncertainty about the dollar, gold and silver will likely experience another rally. In fact, Sprott Market Strategist Paul Wong projects silver could hit $40/oz.
In a report issued last month, he said, “Fundamental supply and demand are overwhelmingly bullish as investment and industrial demand (especially in clean technology) far outstrip supply for the foreseeable future. Since August 2020, silver has been undergoing a high-level consolidation in a bullish flag.”
Physically backed ETFs like the Sprott Physical Silver Trust (PSLV ) can offer investors exposure to silver metal. Sprott’s silver trust also gives investors access to physical delivery, meaning that anytime you want to take possession of the silver you own, you can. Many precious metal funds don’t allow for physical delivery because what you own is actually a piece of paper, not the precious metal itself. This isn’t the case with PSLV, where your silver is waiting for you.
For more information, please visit the Gold & Silver Investing Channel.