greggles
I'll be back!
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Looks like a change of trend for silver with the recent downtrend finally broken.
View attachment 180020
And the PM train has only just left the station.
This will require some good cash flow from the Mt Boppy gold mine to have any chance of reopening Wonawinta.The silver price has been on a tear this year, but unlike its more popular cousin gold, it’s still well short of all-time highs.
As of Friday, the silver price was up by around 30% so far in 2024, versus gold’s 18% rise.
Sitting at around US$29 an ounce, silver is still a long way off the record highs of close to US$50/oz reached in 1980 and again in 2011.
But unlike gold, demand for silver is surging due to its growing industrial use.
Earlier this month, Baker Steel Capital Managers described silver as the potential “unsung hero” of the energy transition.
“Silver faces one of the most significant structural demand trends as a result of the clean energy transition, yet the magnitude of the long-term market imbalance remains under-appreciated,” it said.
The reason for this is silver’s use in solar photovoltaic cells. Each solar panel can contain up to 20g of silver.
While total silver demand dropped 7% to 1.19 billion ounces last year, industrial demand grew by 20% to a record high of 445.1 million ounces, according to The Silver Institute. Use in PVs surged by 64% to a record 193.5Moz.
“This is a large increase, yet it is the exponential growth facing the solar energy sector which gives a glimpse into the incredible demand dynamic underway for silver,” Baker Steel said.
Positive forecasts
The Silver Institute is forecasting a 2% increase in total silver demand this year, driven by a 9% increase in industrial demand to a new record high.
It expects silver supply to decline by 1%, leading to a projected deficit of 215.3Moz, the second largest in history.
Baker Steel is forecasting solar PV demand to account for 23% of silver demand this year, increasing to 29% by 2030.
Its analysts expect the boom in solar demand could lead to massive deficits of 1.4-1.6Boz by 2030.
Analysts are increasingly bullish on silver.
Citi has forecast the price to reach US$38/oz in the next 6-12 months.
Canaccord Genuity recently raised its 2025 silver price forecast by nearly 20% to US$31.60/oz, while Macquarie lifted its forecast by 12% to US$32/oz.
ASX silver exposure
Many ASX investors have steered clear of silver plays after being scarred by several failures earlier this century (anyone remember Macmin Silver?).
However, there is a fresh crop of developers aiming to capitalise on surging demand.
Adriatic Metals (ASX:ADT) recently started production at its Vares mine in Bosnia & Herzegovina, while Manuka Resources (ASX:MKR) is aiming to restart the Wonawinta mine in New South Wales next year.
Have put in a small stake in SS1, but it is early days yet.Investigator Resources (ASX:IVR) and Silver Mines (ASX:SVL) are undertaking definitive feasibility studies on the Paris project in South Australia and Bowdens project in NSW, respectively, with the latter securing $30.2 million in convertible debenture funding from an investment fund backed by Rick Rule and Harry Lundin last week.
Eric Sprott-backed Unico Silver (ASX:USL) and Steve Parsons-backed Andean Silver (ASX:ASL) have large resources in South America.
The newest silver explorer on the ASX is Sun Silver (ASX:SS1), which listed in mid-May following an oversubscribed $13 million initial public offering at 20c per share. Its shares have since traded as high as 75c and are currently sitting at just below 50c.
The company owns the Maverick Springs silver-gold project on Nevada’s Carlin Trend, which has a resource of 292Moz of silver equivalent at 72.4 grams per tonne AgEq.
It makes Maverick Springs the largest early-stage silver development project on the ASX or TSX.
That resource was estimated using metal prices of US$21.50/oz silver and US$1850/oz gold – substantially below today’s levels.
There’s also substantial mineralisation outside the constrained pit shell and the deposit is open along strike and at depth.
Earlier this month, the company kicked off a 7500m drilling program, the first work on the project in 15 years.
About 60,000m, or 200 holes, have been historically drilled at Maverick Springs but drilling to date has only covered 20% of the project area.
As well as infill drilling, the current program will target high-grade zones to the north-west of the resource boundary.
The first results are due in the coming weeks.
I too have been poised to buy into silver stocks, but I need to have some reasonable level of confidence in it going the other way rather than down.Silver has well and truly broken down but the volatility in precious metals at the moment is off the charts. Silver is going through some wild swings, which can make for good trading as long as you are on the right side of those swings.
Hard to know where silver is going in the short term. I keep waiting for it to bounce back but the bearish mood at the moment is keeping a lid on things. Too many sellers right now and many buyers are on the sidelines waiting to see where things go. The US$26.50 area is proving to be good support and if that failed I could see silver going back towards US25, but I'm not convinced that it will get back there. My gut feeling is some larger players are buying heavily at current levels. I'm thinking mints and industry are probably taking advantage of the softer prices and securing the supply they need. The silver supply deficit is still very real and I feel it will limit the downside from here.
Well, none of those low targets were reached before silver started its next upwards move.I too have been poised to buy into silver stocks, but I need to have some reasonable level of confidence in it going the other way rather than down.
At some point I will say to myself, thats far enough and will buy anyway , even if there is a possibility of it going down further.
I have not reached that point.
When SVL is below 14, ARD below 0.013 , or SS1 gets below 0.41, that will probably be my time.
Mick
The volatility is crazy, but like you said, it can be a trader's dream if you're on the right side of the swing. I've been waiting for a bounce too, but the bearish sentiment is definitely keeping prices in check. That $26.50 support level is key, and if it breaks, $25 could be next. But I'm with you, I think there are some big players scooping up silver at these prices, probably mints and industry taking advantage of the discount. The supply deficit is still a major factor, so I'm not convinced we'll see a huge drop from here.Silver has well and truly broken down but the volatility in precious metals at the moment is off the charts. Silver is going through some wild swings, which can make for good trading as long as you are on the right side of those swings.
Hard to know where silver is going in the short term. I keep waiting for it to bounce back but the bearish mood at the moment is keeping a lid on things. Too many sellers right now and many buyers are on the sidelines waiting to see where things go. The US$26.50 area is proving to be good support and if that failed I could see silver going back towards US25, but I'm not convinced that it will get back there. My gut feeling is some larger players are buying heavily at current levels. I'm thinking mints and industry are probably taking advantage of the softer prices and securing the supply they need. The silver supply deficit is still very real and I feel it will limit the downside from here.
The volatility is crazy, but like you said, it can be a trader's dream if you're on the right side of the swing. I've been waiting for a bounce too, but the bearish sentiment is definitely keeping prices in check. That $26.50 support level is key, and if it breaks, $25 could be next. But I'm with you, I think there are some big players scooping up silver at these prices, probably mints and industry taking advantage of the discount. The supply deficit is still a major factor, so I'm not convinced we'll see a huge drop from here.
Great bullish day on Friday. The close at the high of the day indicates that we could see continued bullish price action in the coming week. US$30 is back in the crosshairs. Let's see what tomorrow brings.
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