As gold bullion prices continue to take a beating because of the belief that the easy money policies of the Fed won’t go away anytime soon, silver prices have fallen into the same rut. Just like gold bullion, the silver market has also become a place where bears prevail.
But in the midst of the negativity towards silver, I see that the fundamentals that ultimately drive silver prices higher are getting stronger.
Demand for silver is robust. Sales of one-ounce silver coins at the U.S. Mint have reached a record for the year, and 2013 still isn’t finished! The table below shows how demand for silver (coins in ounces) has increased at the U.S. Mint since 2007.
Yearly Demand for Silver Coins in Ounces at the U.S. Mint
Year Sales in Ounces % Change 2007 9,887,000 2008 19,583,500 98% 2009 28,766,500 47% 2010 34,662,500 20% 2011 39,868,500 15% 2012 33,742,500 -15% 2013* 41,113,000 22% Total % change since 2007 316%
* Data as of November 28, 2013
Data Source: U.S. Mint, Sales & Figures, last accessed November 28, 2013.
Notice on the table above how demand for silver coins at the U.S. Mint this year has already surpassed the level seen in 2011—a time when silver prices were at about $50.00 an ounce.
Rising demand for silver is just one reason why I am bullish on silver prices. But I have another reason, too, as to why I expect silver prices to rise ahead.
While there have been some comments among economists that the Federal Reserve will start pulling back on printing paper money in 2014, the Fed has printed so many trillions of dollars in new money that it has placed downward pressure on the value of the U.S. dollar. Other central banks in the global economy are doing the exact same: printing more paper currency in an effort to lower the value of their currencies to increase exports.
Precious metals like gold bullion and silver, from a historical perspective, have proven to be great stores of value in times of uncertainty. (As I have been writing for some time now, the massive fiat currency printing we see now by world central banks will not end well.)
My take on silver? With silver prices having fallen so much, and demand for the metal rising, I see a significant opportunity in quality, well-managed silver mining companies.
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