'Perfect Storm' Of Silver Demand Could Easily Send Price to $50

(May 19, 2020 - Colin Muller)

Demand for silver is reaching a “perfect storm” after an increase in investment demand combined with a drop in supply, according to Blue Line Futures strategist Phillip Streible

Streible drew his evidence from the recently released Industrial Production and Capacity Utilization report for April, which saw the biggest-ever drop in industrial production (11.2%) including a 6% drop in mining for the month. He suggested that this would cause a squeeze of the silver supply.

If Streible is correct, silver could easily follow in gold’s (XAU) footsteps. Gold has got a boon recently in the wake of feverish Coronavirus spending, stoking concerns of inflation in the future, sending it to retest its highs.

XAG chart by TradingView

Silver’s highs are 200% above its current price, at around $50/ounce.

Silver is not only a purely speculative precious metal, but also has a significant use in industries like automotive and solar power production.

The Financial Times generally does not agree with Streible, writing recently that other analysts forecast a 7% drop in demand.