EDITOR NOTE: As monetary and industrial demand for silver continues to soar, driving prices higher, silver production remains in steady decline. In fact, it’s been falling for four years. It sounds rather simple, but this fundamental imbalance is the main factor that’ll define silver’s trajectory in the years to come. As silver pulls back, keep a close eye on the $30-per-ounce resistance level. A breakout from this level will only confirm the fundamental thesis on silver’s bull run; still in its early stages. It also means that this pullback provides a tremendous buying opportunity to accumulate the metal before it completes the next leg in its upward cycle.
David H. Smith, a senior analyst here at the Morgan Report and a contributor to Money Metals, recently appeared on Investing News Network to discuss the factors driving silver this year, key price levels, and how the next silver bull run is the “real deal.”
What’s Driving Silver?
Speaking on the main factors driving silver’s price today, Smith cited factors related to both supply and demand. On the supply side, he said that silver has continued on a steady decline in production.
“Silver has seen its fourth year of a global decline in ounces produced,” he said. “In other words, miners have to dig up more to get the same amount of ounces because of the lack of discoveries.”
Meanwhile, the monetary demand side has been through the roof, he said, as can be seen by the ongoing coin shortage.
“Investor demand and the ETF buildup in silver has continued no matter what the price is doing,” Smith continued. “All of these factors paint a very bullish picture.”
What to Watch
“The resistance level is around $30, and whether that happens within the next week or two, or it takes a month, (it’s) hard to say,” he said. However, when it begins to close above this key level, Smith foresees a significant bull run, with everyone from individual investors to big funds jumping on board the silver train.
When the bull run is fully underway, Smith continued, and the high $30s and $40s are challenged, silver will take no prisoners.
“This is the real deal,” he said. “When this thing turns around, it’s going to rock and roll once again.”
Quoting David Morgan, Smith advised, “let the market tell us what it wants to do.”
In 2016, silver saw substantial gains of an approximate 15% price increase. However, looking back, Smith revealed that this rally was just a false bull run in disguise.
“It wasn’t quite done with the bear run that started in 2011,” he said. For that reason, he warned, investors and analysts alike must recognize that repeating these same mistakes leaves them susceptible to getting left behind altogether.
But the future leaves the potential for growth.
“It is an asymmetric chance of a lifetime for investors now,” he said. “You don’t need to mortgage the house to do well; you can buy a modest position of physical, and a few good mining stocks, and hold on.”
“You may be shocked at what you see in just a few years in terms of the appreciation on both of those metrics.”
To watch the full interview on Investing News Network, visit this link.
Originally posted on The Morgan Report