Friday , 30 September 2016


Silver: Will It Really Reach $1,000 a Troy Ounce?

Keith Neumeyer believes the silver price could hit $1,000 an ounce. Could suchfine silver fine gold an increase really be in the cards for the white metal?

An article (original) by Jocelyn Aspa (investingnews.com) which has been slightly edited ([ ]) and abridged (…) to provide a faster and easier read.

Keith Neumeyer, president and CEO of First Majestic Silver (TSX:FR) recently explained why he believes the silver price will boom, and it’s tied to the gold price exploding as well.

In an interview with Future Money Trends, Neumeyer said that he is a “big bull” on gold, and that he expects to see a major reset on the world.

“I think in the upper circles it’s pretty well understood that the debt in the world is never going to be paid off. We have to have some kind of rest that’s likely going to include gold,” he said in the interview. “I’ve been quoted many times saying I expect to see triple digit silver and that’s assuming gold doesn’t move.”

Neumeyer believes if the gold price hits $10,000 an ounce, that means the silver price will also see major success. Although the gold price briefly hit $1,300 an ounce earlier in May, it’s dropped back down a bit to $1,211.90. Over a one-year period, the yellow metal has improved, however, going up $22.30 from $1,172.30.

Certainly, there’s still a significant ways to go for the two metals to reach the success Neumeyer boldly predicts. However, the CEO added the current gold and silver prices don’t reflect the rate at which they’re being mined.

For one ounce of gold, we are only mining nine ounces of silver, so that would suggest we should be trading at nine to one, which will put—at $1,200 gold—$130.00, $140.00 silver. If you look at what we are mining today, that’s where silver should be trading at. We are trading at 73 or 75-to-one, and I just don’t think that ratio can last,” he said to Future Money Trends. In order for the silver price to jump to $1,000, it would mean a 6,154% increase.

What others say about the silver price

Although Neumeyer predicts the white metal will jump to $1,000 an ounce, he believes it will see triple digit gains first, surging to $140 an ounce by 2019.

The highest the silver price has gone was just under $50 an ounce five years ago in 2011. Although silver has jumped ahead of gold as the best performing precious metal so far this year, in a survey done by Bloomberg, the highest amount projected by analysts is $57 an ounce by 2019.

Dan Denbow, a portfolio manager at USAA Precious Metals & Minerals told Bloomberg that that Neumeyer’s prediction seemed “aggressive.” He noted that while there has been a lack of investment in silver exploration, with higher prices come new supplies. “The current cost curve wouldn’t support that price,” he said.

That’s quite a leap to make in the next three years. In the May 2016 FocusEconomics Report, the panel of analysts surveyed sees the price of silver averaging at just $15.70 an ounce by the end of 2016, with the metal expected to rise to $17.30 an ounce by the end of the year.

Furthermore, although the silver price is up so far on the year, it’s seen a bit of a dip as of late, dropping from $17.39 to $15.90 over the month of May. Still, the silver price is seeing a positive momentum, and FocusEconomics says that it’s due to rising demand and the current weak value of the US dollar. “Expectations of further delays in US interest rates hikes should continue to increase the metal’s attractiveness. In addition, concern over supply is fueling the price gain and output is set to fall in 2016 for the first time in five years,” the report reads.

Will the price of silver really reach $1,000 an ounce? Obviously, it has a long way to go before it does. Regardless, the precious metal is on the rise again, and that’s always a good sign.

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