Silver’s Next Wave Starts Now

Precious metals are regaining their appeal.

Silver has risen by $10/oz from a recent bottom near $70/oz. Meanwhile, gold has climbed over $400 from its low of $4,400/oz.

Bullion appears strong at this point.

Mining stocks are recovering as well. The GDX gold mining ETF has rebounded from $79 on 3/20 to $98 today, while the SILJ silver miner ETF has climbed back from $26 to $32.

That said, it’s premature to celebrate miners just yet, given the ongoing uncertainty in the Middle East.

While the ceasefire largely holds, which is promising, the Strait of Hormuz remains closed. And as we’ve highlighted repeatedly, negotiations with Iran are still far from resolution.

Increased oil prices translate into higher expenses for mining operations. For now, physical metals present a clearer investment outlook than miners.

Although many believe the crisis has passed, I remain skeptical.

However, once oil prices fall below $70 per barrel again, miners are likely to surge.

The timing is unclear, so my current advice is to allocate new funds toward physical gold and silver rather than mining shares. This can involve coins, bars, or ETFs such as Sprott’s Physical Silver Trust (PSLV) and Physical Gold Trust (PHYS).

Today, we’ll concentrate on silver and why prices above $100 per ounce could be imminent.

Solar Demand Surges Silver Higher

Even before tensions with Iran escalated, global energy costs were rising amid a boom in data center construction.

Currently, energy inflation has intensified with sharp increases in oil and gas prices.

As we predicted weeks ago, this has triggered a surge in solar panel demand.

Solar panels account for roughly 19% of silver demand. Silver’s exceptional electrical conductivity and superior resistance to corrosion compared to copper make it essential.

Thus, the small electrical contacts on solar panels incorporate silver, as illustrated below:

With silver’s unique features, solar panels can operate effectively for decades. Even at near $80/oz, silver remains the preferred material.

The energy crisis has naturally accelerated solar adoption. Consider these recent global headlines:

BBC: UK Sees Surge in Solar Panel Demand Amid Rising Energy Costs
Bloomberg: Malaysia’s Biggest Solar Firm Sees Jump in Demand on Iran War
Impakter: Suniva to Invest $350 Million in South Carolina Solar Plant

Following resolution of this crisis, I anticipate solar installations worldwide, particularly across Asia-Pacific, to maintain strong growth.

Asia has witnessed firsthand how quickly oil and LNG imports can vanish and is therefore motivated to lessen reliance on foreign energy sources, boosting solar power demand further.

Silver’s Shanghai Premium

At present, silver trades at about $79.20 per ounce in the U.S.

In contrast, Shanghai prices stand at $89.50—reflecting a considerable 13% premium.

Source: GoldSilver.ai

The elevated price in China is due to markets being grounded largely in physical silver. Much of the metal goes into manufacturing.

Nearly 90% of solar panel production happens there, and a strong community of silver investors is growing.

Meanwhile, in the U.S., silver predominantly trades as paper contracts on the COMEX. Although investment interest is increasing, it has yet to reach full potential.

This Shanghai premium signals tight physical silver availability, with local buyers bidding prices upward.

Industrial demand remains robust moving forward.

What About Silver as an Investment?

Late last year through January, silver experienced its first significant surge, briefly hitting $120/oz.

This spike resulted from a rare alignment of strong industrial demand combined with heightened investment interest.

This was the initial wave, and I anticipate a second one approaching soon.

Silver serves as the precious metal accessible to everyday investors. While gold paved the way early in this bull market, largely fueled by central bank purchases,

I believe silver’s prospects are even stronger. When industrial and investment demand rises simultaneously again, significant gains are likely.

Amid the ongoing energy crisis, we must not overlook an impending debt and credit crunch on the horizon. When that unfolds, silver (known as the “poor man’s gold”) will see skyrocketing demand.

Despite the economic turmoil, silver remains my top choice for precious metals exposure.

Volatility is inevitable, but favorable conditions are once more aligning. Over the coming years, I remain optimistic about silver reaching $200/oz.