Silver is down 0.9% so far in July after falling 2.9% in June.
Silver has long been undervalued and the current dip means there is a strong opportunity to obtain silver at lower spot prices. Silver fell 2.9% last month after surging 14% in May and rising 7% in April. Yet, as we saw with the rally this spring and the 48% gains in silver we saw in 2020, silver is known to make explosive moves. It's impossible to time the markets, so we can't know when silver will make it's next big move, but when it does, it will be swift. Don't miss it.
Gold-Silver Ratio says....
We know that silver is undervalued because of the Gold-Silver Ratio. The Gold-Silver Ratio has been signaling a low in silver prices for years.
The current Gold-Silver Ratio (the number of ounces of silver it takes to purchase one ounce of gold) is currently just below 80. In a typical market, a ratio at or above 80 ounces of silver to buy 1 ounce of gold indicates the bottom of gold and silver pricing, and typically gold and silver prices go much higher from there, causing the ratio to narrow as the gains of silver tend to outpace those of gold. The ratio bottoms out around 30-50 and from there the bear market begins.
This current bull market has been anything but typical, however, with the Gold-Silver Ratio reaching an unheard of peak of 125 to 1 in the spring of 2020 as the Covid-19 pandemic dominated headlines and impacted economic policy. The ratio has stabilized over the last few years, but at current levels, this key metric is still quite high and indicates that both gold and silver are currently undervalued. Even with gold nabbing another new all-time record high this week, spot prices can still go much higher before the long-term trend resets, and based on historical patterns, investors can act with confidence knowing that silver is not far behind.
Silver Supply And Demand
We also know that silver is undervalued because the pricing has not caught up with the high demand and dwindling supply. The past three years of deficit silver production have wiped out the surplus of above-ground silver built up over the previous decade and demand continues to surge as silver is the metal of choice for virtually every green energy initiative in development.
2023 marked the third year in a row of a deficit in silver production and, while down 30% from the previous, it was still large at 5,732 tons. The ongoing deficit conditions are a product of subdued supply plus robust industrial offtake, which helped offset losses in other demand areas. The silver market deficit is expected to grow by 17% in 2024 as supply stagnates and industrial demand posts another record.
Experts have indicated that the growing demand for silver in technology sectors, mainly the photovoltaic sector, will likely create a supply shortage in the coming years. Silver demand remained high in 2023, but despite that, prices were rangebound for much of last year and silver underperformed gold. Gold benefited from clearer safe haven interest while silver was hurt by broader industrial metal weakness.
Silver in 2024
While silver has started moving up in 2024, silver has not even fully begun to find its footing in the current bull market! This is a blessing in disguise for investors who are ready to enter the precious metals markets and just looking for the right moment to strengthen their positions. This is that moment. Long-term fundamentals are bullish, so the current trading range provides an excellent buying opportunity.
2024 is expected to be another year of solid silver demand, according to The Silver Institute. The eventual easing of U.S. monetary policy is expected to drive a notable rally in precious metal prices, although short-term downside risks may cause headwinds. Silver will benefit from interest rate cuts, but major price gains and a narrowing of the gold-silver ratio may have to wait until tightness in physical silver markets develops.
All year long, ASI has been telling the story of silver... and we urge you to catch up before silver moves onwards and upwards to it's next chapter in the current bull market. There's time before silver catches up to all-time highs, but that time is running out...
Give us a call at 1-800-831-007 or visit www.assetstrategies.com to see live pricing and premiums on silver bars and coins today!
