by James Burgess, SHTFPlan:
Precious metals are an important component of every investor’s portfolio, and while gold often gets all the hype, another precious metal will be a much better bet in 2017: Silver.
The market for silver continues to tighten as supply has failed to keep up with demand for much of the past decade. Silver is used in all facets of modern life, including electronics, medical devices, engines, batteries, solar panels, LED lighting, semiconductors, touch screens, dentistry, and nuclear reactors. The list goes on.
Demand for silver is up by more than 35 percent since 2009, while supply only grew by a little more than 10 percent. In 2015 alone, global demand for silver exceeded supply by roughly 129 million ounces, or about 11 percent of overall demand. With silver consumption set to expand indefinitely, the supply deficit will continue to put upward pressure on prices in the years ahead.
The set-up here is fantastic because indications are that we are on the edge of another bull run at a time when silver mining stocks are significantly undervalued. Silver prices had a good run for most of 2016, but have fallen back in recent weeks as the dollar has strengthened and uncertainty surrounding the U.S. presidential election abated. But the pause in the run up in prices will be brief, offering investors an appetizing entry point for a crucial commodity in today’s globalized economy.
Silver may be down 10% from its peak of $20.67 in Q3, but the sell-offs were based on sentiment, not fundamental reality—and this is exactly where smart investment finds opportunity. The strongest documented indication of this is the Q3 earnings of silver miners, which only the savviest of investors are picking up on. Pan American Silver (NASDAQ:PAAS) reported Q3 earnings of an impressive US$43.4 million—up US$9.2 million over the previous quarter—just for starters.
Silver mining costs have plunged and it’s a brilliant time for a new silver company—Silver One (TSXV: SVE & OTC: SLVRF)—which has just acquired 100% interest in three silver plays in Mexico, the largest silver-producing country in the world. It also helps that Silver One has the strong support of a mining legend and has financing in place to move aggressively on exploration and development.
In the pre-bullish environment, investors will be looking to developers in the right place at the right time who can cash in on low-cost mining to scoop up and develop new pure play properties.
We’re sitting right now in the middle of an anomaly that fundamentals dictate will correct itself very soon. Once undervalued silver starts climbing higher again and capital starts pouring in, pushing prices higher, the low-buy opportunities will fade.
Here are 10 reasons to keep a close eye on Silver One in the early New Year:
1. The Global Silver Lining: A Precious Metal Premium
Global investors are magnetically drawn to precious metals in times of uncertainty and instability. Global tensions are as high as they were in the 9/11 aftermath, when precious metals soared phenomenally as everyone hedged bets against global instability.
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