Silver's Surge: $30 Soon ... $300 By 2030?
Here's everything you need to know about the "overlooked" metal ...
Gold prices have hit their highest-ever level, fueled by trader bets that interest rates will fall in the second half of the year. And with those possible rate cuts, easing inflation and investors looking for safe-haven parking spots, the “yellow metal” may still have room to run.
But one expert likes the “other” precious metal – silver – even more than gold.
With its strong industrial demand, popularity as a retail metal and lower price per ounce (about $24 vs $2,135), silver will outperform its bigger-ticket cousin, says Peter Krauth, a friend, author and former colleague who now runs the Silver Stock Investor, an investment publication focused exclusively on the “common man’s precious metal.”
Peter believes silver could hit $30 an ounce by the end of 2024. And the potential catalysts in place could rocket it to $300 or beyond in the years to come – a scenario he detailed in his 2022 book “The Great Silver Bull.”
And, during a recent chat, he shared an updated assessment with me.
“I know that $300 price target sounds sensational,” Peter said. “But just based on the history of how silver has performed in prior bull markets, I can point to several factors that support my projection. We know that silver starts to rally strongly after gold, with a lag, when the Fed starts to cut rates. In fact, my research shows that silver rallied sharply in each of the last three Fed rate-cutting cycles, with an average return of … 413%. Here’s one other interesting point: As you know, I frequently speak at metals-and-mining symposiums. After one, a silver-mining executive told me he’d just read my book … and that he thought my conclusions weren’t just logical … they were absolutely sound.”
Here’s an edited transcript of our talk…
WPIII: Peter, thanks for taking the time to chat today. As you know, we created Stock Picker’s Corner to give our members an “edge” in building wealth. Your price prediction for silver – which we’ll get to here in a second – is an attention-grabber. So is the ‘investment case’ you’re making.
I want our members to have the lowdown on this developing opportunity.
So, for everyone here, including folks who may be new to metals, let’s start with the basics … the foundational question.
Why silver?
PK: Bill, as you know from our chats over the years, I’m a mining and metals guy. I live up here in Canada – one of the true mining meccas on the planet – so I know the players, know the history, and know the market. I regularly visit properties and mining sites and see the operations first-hand. And I’ve made silver my chief focus.
WPIII: Because … ?
PK: Because … like its more-expensive counterpart … the so-called “yellow metal” (aka gold) … silver is viewed as a "store of value.” But, unlike gold, silver is an industrial metal, too.
Its use in solar panels has soared to 20% of the market. It’s also in automobiles, electronics like smartphones and tablets, medical applications, glass coatings in mirrors ... and that’s just a short-list of the “use cases.”
WPIII: I know I’ve heard you say that “we’re within a few feet of silver nearly every second of the day.”
PK: [Chuckles] Your memory is excellent.
WPIII: If I also remember correctly from our many talks, about half of silver demand is driven by some of these industrial uses … or, at least, that was the case as recently as 2022.
PK: That’s right, Bill. In fact, based on 2023 data, it’s now more than 60% going to industrial applications. And I’ve always found that fascinating … you know, that silver is both an industrial metal and a monetary metal.
Looking ahead, I believe silver will be a massive wealth generator, which I know is the type of “edge” your readers are looking for. As everyone sees gold prices keep ticking past the $2,000 mark, some will feel it’s gotten too expensive.
As an alternative, people will turn to silver, which is a smaller market. Being a smaller market, it won't take much to push prices higher.
So the time to build your silver position is … now.
WPIII: Peter, I’ve always been fascinated by the investing subculture … and the passion … that’s tied to silver collectors, accumulators and investors. I’ve seen online communities where folks talk about “stacking silver.” They collect U.S. Silver Eagles, Canadian Maple Leafs and South African Krugerrands. They grab bank bags of silver coins … hoping to score so-called “junk silver.” They share pictures of their silver hoards with the same pride that parents share images of their kids. Some of the collections out there are hugely impressive.
PK: [Laughs] That’s a great observation, Bill. There is a passionate community out there, with some folks labeling themselves as “Silver Stackers.” These “stackers” work to add bullion, bars, silver rounds, ingots and coins of the types you mentioned … and more … to their “hoards.”
It’s a colorful group, to be sure. And a passionate one. But I have to say … that passion is well-placed – they’ve identified the “right” asset to stack.
WPIII: That’s good stuff …
So, Peter, you’ve provided a quick rundown of silver’s “use cases.” And the “community” behind it.
Let’s talk numbers. Can you share a little more about where silver is trading now compared to its historic range?
PK: As we’re chatting, silver is trading around $24. Back in 1980, silver traded for nearly $50 per ounce. That means silver prices are roughly half of what they were at their peak, which was 44 years ago. That’s true for no other commodity I can think of.
In comparison, gold prices just reached an all-time high.
On a relative basis, that tells me silver prices have a lot higher to go.
WPIII: Interesting. Well, you know what I’m going to ask next. What’s the general outlook for silver in 2024? And, more importantly, I want to know your outlook.
PK: Bill, I’d have to say that the overall outlook for silver this year is pretty favorable. The last three years have seen structural deficits in the silver market. The total of those three years’ deficit adds up to half of an entire year’s supply. The Silver Institute is forecasting another shortage this year, and ongoing deficits for years.
A lot of that is being driven by industrial demand, which hit a new record last year. Demand from solar is the single largest industrial use – and it’s soaring. The International Energy Agency expects solar to become the largest source of electricity globally by 2027, surpassing coal and natural gas for the first time.
In addition to all of this, I expect investment demand to kick in pretty dramatically this year. I don’t know yet what the trigger will be – maybe Fed rate cuts, a banking crisis, stock market crash, a recession, or any number of events.
My forecast is that silver will reach $30 before the end of this year.
Ultimately, I expect silver will soar in a ‘mania phase’ to about $300. Now I know that sounds sensational. But, in my book, I provide several indicators that all point to that price level. That’s just based on the history of how silver has performed in previous bull markets. In fact, one silver-mining executive just told me, after reading my book, that he thought my reasoning was perfectly sound and logical.
WPIII: Let's do a little bit of “handicapping” here … and talk probability (from 0% to 100%). What odds do you give your forecast of coming true? Also, can you share with the members what needs to happen for your outlook to come true?
PK: UBS strategist Joni Teves recently said: “In a scenario where the Fed is easing, we think silver can do really well. It tends to outperform a move in gold.” She expects gold prices to hit $2,200 and said that a ‘dramatic’ outperformance awaits silver in 2024.
I completely agree with that. We know that silver starts to rally strongly after gold, with a lag, when the Fed starts to cut rates. In fact, my research shows that silver rallied sharply in each of the last three Fed rate-cutting cycles, with an average return of … 413%.
We can never be 100% certain, but it’s highly likely the Fed will cut rates substantially this year. The central bankers don’t want to look like they are impeding the economy in an election year, and a recession also looks very probable. Throw in a black swan, and we could get more rate cuts than the market is pricing in currently.
WPIII: You mentioned gold a moment ago. There’s gold/silver ratio (GSR). Does that come into play? The economy? Industrial demand? Inflation?
PK: Good follow-ups, Bill. I also think the risk of inflation rising again is being underestimated. In the 1970s, we witnessed three successive waves of inflation, each higher than the last. My working scenario is that we will see a similar pattern again. I call this the inflation decade. I don’t expect inflation to go back to 2% and stay there.
I think the Fed will eventually have to raise its inflation target to 3% from 2%. That will be a new inflation paradigm.
The gold/silver ratio is a good indicator as to the relative value of silver versus gold. The average of the last 40 years is about 60. We’re currently near 90! That’s 50% higher. It means that it takes roughly 90 ounces of silver to buy one of gold. I think once the Fed cuts rates, gold will rise and silver will rise faster, bringing the ratio down.
And, by the way, Bill: When the ratio is falling, it’s usually good for the price of both metals.
Going back to gold for a moment … it’s been stellar – almost continuously above $2,000 – since late November. And yet … sentiment is in the toilet. Well, at least in the West. Ronald Stoeferle, who publishes the must-read annual In Gold We Trust Report recently spoke at gold conferences in Asia and the Middle East. He told me they are very bullish on gold in those parts of the world. I guess it boils down to their long history with – and appreciation for – precious metals.
Gold has been super strong, especially since the U.S. weaponized the dollar by freezing Russia’s holdings of U.S. Treasuries. You can be sure a lot of central banks and sovereign investment funds suddenly realized they were overweight Treasury holdings and underweight gold. After all, gold and silver are no one else’s liability.
WPIII: That’s great info, Peter. What’s your preferred “investment vehicle” for silver? Are you a coin guy? And if so, what kind?
PK: For physical silver, my main choice is one-ounce coins. I know we’re both fans of U.S. Silver Eagles, and I think Canadian Maple Leafs are another great option, being that they are instantly recognizable.
You will pay more for mint-issued coins, but you will also get more for them when you sell.
WPIII: With coins, do you prefer ungraded/graded? What are your parameters there?
PK: When it comes to coins, Bill, I’ll admit one aspect I’m not an expert on is collectible coins.
That said, I’m quite sure graded is preferred over ungraded, as it gives the owner an assurance of the quality level.
Some people may prefer bars, and if you go that route, I would go with the larger sizes of 10 oz, 100 oz, or 1 kilo.
I also find “junk silver” interesting, which is coins that have little value outside of the silver content within them.
WPIII: Undoubtedly, we have folks with different experience levels in buying precious metals. If you had a generalized “strategy” for everyone, what would they need to follow? I guess what I’m saying is that … with physical silver … for folks to avoid being “shorn” … where should they look to make their purchases?
PK: Bill, I love the messaging of Stock Picker’s Corner (SPC) that investing has been made complicated ... but shouldn’t be. My advice falls right in line with that straightforward approach.
Demand is increasing for precious metals, so it’s important to pay attention to premiums and not overpay.
Also, take the time to find a reputable dealer. By that I mean … do your homework. Find out how long they have been in business and study the customer reviews and testimonials. A lack of reviews … or a “stack” of negative reviews … gives you a quick red flag that it may be a service to avoid.
WPIII: “Stack” … I see what you did there …
PK: I couldn’t resist …
[Both men laughing]
WPIII: Peter … you never disappoint. That’s good stuff.
Let me shift gears a bit here … to a couple of interesting conversations we’ve had over the past few years … about crypto.
Do you feel as if cryptocurrencies pose any issues for precious metals?
PK: I like to say gold and silver are “eternal metals.” They’ve been prized ever since they were discovered. Silver, especially, has numerous applications. Remember, it’s the most conductive and most reflective of all materials. That’s not easy to substitute, especially with the growing demand from advancing technologies.
Cryptocurrencies are very new as an asset class. But they’ve already had a huge impact, thanks particularly to the blockchain. We still can’t quantify … or mentally picture … all the possible applications – they’re limitless. The markets will decide which specific ones deserve to survive.
But I believe the asset class is here to stay. I’m particularly partial to those – like Bitcoin – that have a finite supply … because they have the best chance to survive as a “store of value.” In my view, these are the few that offer limited competition to gold and silver as an inflationary hedge.
Of course, I don’t see precious metals and cryptocurrencies as an “either/or situation.” Investors should own both – according to their comfort levels.
I think the world is ultimately heading for a financial system “reset.” And I’ve thought for some time that the future of money will one day be a gold-backed and/or silver-backed cryptocurrency. You’ll have the best of both asset classes combined into one. As a side note, central banks will no doubt soon issue their own central bank digital currencies (CBDCs). But don’t be fooled. These are still unbacked with no intrinsic value … and will only make inflating the money supply easier.
Gold and silver have enjoyed millennia of acceptance, have an intrinsic worth, and offer great utility. Cryptocurrencies on an immutable, decentralized blockchain offer a high degree of security, convenience, and portability.
It’s an ideal combination.
WPIII: Peter … I thank you. For your time. And for sharing your insights with the folks here at Stock Picker’s Corner has been great.
Any final thoughts? Things to watch for?
PK: Thanks, Bill. Silver is in the midst of a secular bull market that has several years left. And yet it’s still an extremely undervalued asset, something near non-existent in today’s market. It’s the quintessential opportunity to “buy low."
Silver is indispensable and, in many ways, is irreplaceable. Since it’s crucial to solar panels, I call it “the new oil.” But because of its explosive upside, I call it “the next uranium.” For any of your readers who haven’t followed uranium, its spot price has soared from $50/lb. last April to $92.50 recently on the market coming to grips with its soaring demand and restricted supply.
Silver is very similar. The only difference is the market hasn’t realized nor priced that in yet. But that’s coming. It truly is a generational opportunity.
For perspective, consider that silver was up 3,400% in the 1970s – that’s 34x. Some silver juniors were up 100x and much more. That’s the potential the silver opportunity is offering us right now.
WPIII: Great. Thanks again, Peter.
PK: My pleasure, Bill.