• 6 hours Bezos Is Heading To Space This Sunday
  • 3 days El Salvador’s Surprise Bitcoin Move
  • 6 days Markets Unfazed As Inflation Hits 13-Year High
  • 7 days How the Token Economy is Disrupting Financial Markets
  • 9 days FBI Investigating 100 Types Of Ransomware Attacks
  • 11 days Fed Ends Corporate Credit Emergency Lending Program
  • 13 days AMC Becomes the Latest Winning Meme Stock After GameStop
  • 15 days The Real Reason Your 401k Has Been Lagging
  • 15 days China Lifts Cap On Births, Allows Three Children Per Couple
  • 17 days The Market Is Ripe For Another GameStop Saga
  • 20 days Senate Grills Big Banks Over Pandemic Opportunism
  • 22 days Cannabis Has A Major Cash Problem
  • 22 days Ransomware Netted Criminals $350M In 2020 Alone
  • 23 days Russia Is Taking On Google
  • 24 days Chinese Regulators Deal Another Big Blow To Bitcoin
  • 25 days Ohio Residents Brave Vaccine for Chance To Win $1M
  • 27 days Inflation Is Coming. Are You Prepared?
  • 28 days Travel Might Get Another Supersonic Disruption
  • 29 days The World Is Running Out Of 6 Key Resources
  • 30 days $15/Hour Minimum Wage Might Happen Naturally
Gold Rally Set To Continue Despite Election Drama

Gold Rally Set To Continue Despite Election Drama

Gold prices have soared this…

A Looming Decision From The Fed Could Send Gold Soaring

A Looming Decision From The Fed Could Send Gold Soaring

The European Central Bank (ECB)…

Gold Slips Following Stimulus Announcement

Gold Slips Following Stimulus Announcement

Gold prices retreated on Monday…

Frank Holmes

Frank Holmes

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing…

Contact Author

  1. Home
  2. Commodities
  3. Precious Metals

What's Fueling The Silver Stock Rally?

Silver Stock

The price of silver soared in May, jumping more than 19 percent on safe haven demand as well as increased expectations of a swift economic recovery, given its many industrial applications. Not only was this silver’s best month since 2011, but it also marked an impressive turnaround for the white metal that just recently plunged to a more-than 10-year low. From March 18 through June 1 of this year, silver soared more than 52 percent, erasing all of its losses due to the coronavirus pandemic.    

   

The question now is whether the rally can continue along with economic improvement, or whether it’s too late to start participating. I believe there’s still a lot of runway left, especially when you consider the growing need for silver in emerging technologies such as 5G wireless networks and photovoltaic (PV) cells, the building block of solar panels.

Silver ETF Holdings at an All-Time High

Silver started June in overbought territory based on the 14-day relative strength index (RSI), but that didn’t seem to deter investors. Global ETFs backed by physical silver have added some 142 million ounces since the metal dipped below $12 an ounce in mid-March. Holdings now stand at an incredible 746 million ounces, the most on record, according to Bloomberg data.

Interestingly, if you look at the chart below, silver ETF holdings appear to have begun tracking the price not of silver, but of gold.

This suggests to me that some investors are using the white metal as a more affordable safe haven and diversifier than gold. But there’s more to the story.

Increased Silver Demand in Industrial Applications, Most Notably Solar

Like copper, nickel, lithium, cobalt and other metals, silver is set to become a major beneficiary of emerging industrial applications.

That includes sources of renewable energy, and solar specifically, which continues to ramp up around the globe in response to a combination of carbon emissions legislation and a rapid decrease in the cost of “green” electricity.

According to a recent report by CRU Consulting, solar power generation will increase to 1,053 terawatt hours (TWh) by 2025, close to double the amount that was generated in 2019. Amazon alone is planning five major solar projects around the world, including its first in China, as the retail giant seeks to reach 80 percent renewable energy by 2024 and 100 percent by 2030. Once completed, these five projects will generate 1.2 million megawatt hours (MWh) of energy every year, or enough to power 113,000 average U.S. homes, according to a press release.

I expect this to be a huge boon to silver, which is used to manufacture the all-important PV cells found in solar panels. Between now and 2030, PV manufacturers are projected to consume a staggering 888 million ounces of silver, according to CRU. To put that in perspective, that’s 51.5 million ounces more than the combined output from global silver mines in 2019.

But there are other technologies on the horizon that will require vast amounts of the white metal. Related: Conspiracy Theories Set Tone For 5G Cold War

The global rollout of 5G technology, still in the very early stages, will increase production for goods such as semiconductor chips, cabling, microelectromechanical systems (MEMS), Internet of things (IoT)-enabled devices—all of which require silver. In 2019, the amount of silver used in the applications stood at 7.5 million ounces, or 0.75 percent of annual output. By 2025, that amount could more than double to 16 million ounces and, by 2030, triple to 23 million ounces, according to estimates by Precious Metals Commodity Management.

Silver Miners on a Tear

Obviously there are other ways to get exposure to silver than buying physical bullion and silver-backed ETFs. Those include the silver miners themselves, if you can stomach the extra volatility.

Silver producers had a below-average first quarter compared to gold miners, with production plunging even before COVID-19 led to the closure of mines. This had a negative effect on revenue.

Even so, a number of silver miners have performed very well, especially following the market lows in March. Among our favorites are SilverCrest Metals, up an incredible 105.8 percent over the past 12 months; Pan American Silver, up 142.3 percent; and First Majestic Silver, up 56.18 percent.

By Frank Holmes

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment