Silver Mining Demand Remains Rock-Solid

However, the recent bout of turbulence that both silver and gold saw, spurred on by President Trump’s Fed chair nomination, has led to some investors taking a more cautious stance on the metal. However, is the caution necessarily warranted? 

In a recent interview with James Connor of Bloor Street Capital, John Ciampaglia, CEO of Sprott Asset Management, broke down the potency of silver’s long-term fundamentals. He began by explaining that silver’s initial rally allowed for a crucial catch-up trade to play out. Ciampaglia noted that the price of silver about fifteen years ago significantly lagged behind that of many other commodities, potentially giving the precious metal plenty of room to catch up amidst its rally. 

Meanwhile, favorable fundamentals could continue to buoy the silver rally. As Ciampaglia noted, silver, alongside other metals, were recently included in the U.S. Geological Survey’s list of critical materials. Not only that, but the U.S. intends to put together a $12 billion reserve fund for critical minerals. Crucially, this is all playing out while China has placed its own export restrictions on silver. 

Putting this together, Ciampaglia notes that the U.S. mining industry could distinctly benefit. Not only will the U.S. government be potentially investing in partnerships with domestic mining companies, but new permitting timelines and price floors could be on the table as well. And considering how competitive the trade relationship is between the U.S. and China, investment in the domestic silver mining industry is likely not to slow down any time soon.

“Silver is a very important metal in the long term,” added Ciampaglia. “It has been in a supply deficit for the last five years and is expected to be again this year. The longer-term fundamentals, I think, support higher pricing. If you think about where we are today in the mid-80s per ounce versus $50 in 2011, it still seems very attractively priced to us. This catch-up trade took a long time, but it’s clearly in motion. And while it’s going to be volatile and bumpy along the way, we are still quite constructive on the price of silver.”

The Sprott Silver Miners & Physical Silver ETF (SLVR ) can help investors stay engaged with the silver industry and its respective miners. True to its name, SLVR invests in both physical silver and the miners responsible for harvesting it. 

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