“Peak Silver” Is About to Rock Markets and Bring Huge Profits to Smart Buyers
“Peak Silver” Is About to Rock Markets and Bring Huge Profits to Smart Buyers by Peter Krauth Wall Street Examiner
TDC Note – With the lack of capital inflows into the mining sector for the past decade it is not surprising to see a downturn in mining production – no capital no new mines – no new mines no new production. Very, very simple.
It’s Economics 101. Price works to balance supply and demand. Limited supply causes higher prices; higher prices help curb demand.
Well, a potentially very profitable twist on that equation is playing out right now in the silver market. Mined silver supplies have been drying up over the past few years, while silver prices have climbed 20% in the same time frame.
But the exciting opportunity for investors is that precious metals, like silver, are among the only assets that can see higher demand when prices rise. It’s just not what normally happens in “regular” markets.
But, to be fair, silver (and gold) are anything but normal markets.
Silver supplies risk falling short of demand for some time to come. In mid-December 2017, I said silver would likely tack on steady double-digit gains before entering a “Tulip Mania”-style profit frenzy.
I think these charts confirm my suspicions. It’s likely we’re in the early innings of spiraling silver prices as more and more investors decide they simply can’t let this bull leave them behind…
Silver Production Won’t Ever Be as High Again
2015 may well have marked a long-term peak in global silver production. That’s when the world’s mines produced 893 million ounces.
The following year, 2016, saw the first drop in a decade, with output falling to 887 million ounces.
2017 was no better, with production falling another 30 million ounces, to just 857 million ounces.
Forecasts point to a very small increase of 867 million ounces in 2018, up only 1% over the 2017 haul.
But… there’s a very big “if” attached to that small increase.
You see, some of the market’s most significant silver producers face considerable obstacles all over the world.