We all know the old saying, that the only two certainties in life are death and taxes. Fortunately, there are certain basic principles that tend to yield results that are almost as predictable. Take central bank behavior.
With the way governments and central banks have been acting lately, we know that in the near future these agencies of monetary intervention will keep printing money to keep interest rates low if not negative.
We know what money printing does to the value of currencies. The outcome often isn’t very favorable. We also know how currency weakness (in our case dollar weakness) can affect the price of silver and gold. Both metals tend to move inversely to purchasing power declines.
Let’s talk about the more undervalued of the two--that is, silver. One metals expert who has been touting the current monetary environment as a good sign for some time now is Keith Neumeyer, CEO of First Majestic Silver, who recently shared his optimism at the Vancouver Resource Investment Conference.
In light of everything that’s been going on in the economic climate over the last few years, he has been bullish through and through. In 2018, Neumeyer predicted that silver would eventually reach triple-digit prices.
Two years later, he’s still holding on to this claim. In fact, with everything that’s happening in the global markets, his convictions are even stronger today. While Neumeyer does admit that he initially thought the price jump would happen a bit sooner than this, he’s still “cautiously enthused” that we are still headed in that direction.
It’s one thing to be relatively bullish on silver; quite another to hold a projection so high. You’re probably wondering what’s behind Neumeyer’s investment rationale. Well, according to him, it goes beyond the normal indicators such as inflation and tumultuous world events such as the recent U.S./ China trade war. It goes beyond any factors that tend to cause short-term “headline risk” affecting market sentiment.
His rationale for sticking with his initial prediction goes back to the most basic economic principle: supply and demand.
At the Vancouver Conference, he told industry leaders that while the headline-grabbing events tend to roil markets on a near-daily basis, these things have absolutely no bearing on supply and demand. In other words, short-term market sentiment is one thing--it’s what excites the mainstream investing public--while slower and longer-term fundamentals is another; it often creeps up, not like a rogue wave disrupting the surface but like a much deeper current that slowly affects everything above it.
That principle, he reasons, is what will win out at the end of the day.
As for most silver investors, many of us already know this. But it’s always reaffirming to hear the same opinion from one of the more powerful and well-respected CEOs in the silver industry (for what it’s worth, he was recently awarded the Kitco Mining CEO of the Year Award).
Sure, this award goes to show exactly what the silver industry thinks of both Neumeyer and his bullishness on the precious metal he has worked with for almost 20 years. But aside from the accolades, it’s also a major signal that most industry experts also believe that silver is due for a major boom in the coming year.
In 2020, we are situated in a unique position for major long-term gains. Remember, we’ve always warned against following the investment herd. From 2017 onward, we’ve called the bottoming of silver. We weren’t alone in making that forecast. Investors who sought proof of that “thesis” have it now. Problem is, most missed the big move from the bottom floor to current levels. The good thing is that the silver run isn’t over.
All signs point to the fact that precious metal prices should be a lot higher than they are now, and that they’ll only continue to climb for a number of economically-driven reasons. The fact that, at this moment, the prices are still so reasonable and have a lot of room to grow should signal to investors that now is the time to up their stake in these tangible investments.
Will we see Neumeyer’s predicted levels of “triple-digit” growth? Or, will we see silver follow a similar path to that of palladium, a 414% surge that takes silver somewhere near the $75 an ounce price range? Either way, both outcomes would be highly favorable to anyone holding the metal. And if any of this may sound implausible to you, then ask yourself, how well do you really understand the fundamentals behind this potential price move?