Earlier this year, as investors around the world panicked and stock markets crashed across the board, one asset class held strong and actually gained. It was, by all accounts, a capital flow panic out of broader stocks and into precious metals. As a safe haven, precious metals like gold and silver have long been sought by a panicked populace during times of crisis and given the current economic and monetary debacle created by central banks, we can safely forecast a continued rise over coming years for this reason alone.
But according to Keith Neumeyer, there is another key reason for why we could see explosive prices, specifically in silver, because major shortages loom and current valuations for the precious metal are nowhere near where they should be. Given his experience and current position as the CEO of billion-dollar mining company First Majestic Silver and Chairman of mineral bank First Mining Finance, there is no better source for understanding what’s happening in silver markets today and where we can expect them to go in the mid to long-term.
As Neumeyer notes in his latest interview with The Daily Coin, gold is currently selling for about 75 times the price of an ounce of silver, but from a mining and production standpoint, the physical ratio is about 10-to-1. Coupled with growing global supply shortages for this essential metal, that means prices for silver should be trading significantly higher than they are today:
We are currently trading about 75-to-1 thereabouts and the mining ratio is about 10-to-1… so for every ounce of gold we’re mining 10 ounces of silver… so that tells you it’s way rarer than the market understands… I think that as gold goes higher over the next couple years, the ratio is going to collapse on a percentage basis… and that’s why I think we will ultimately see triple-digit silver.
This post was published at shtfplan on April 26th, 2016.
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