Which silver stocks are poised to explode? Peter Krauth
NEW YORK (February 19) The silver market is facing a unique confluence of factors that could lead to a significant price surge, according to Peter Krauth, author of "The Great Silver Bull."
In a recent interview with Kitco Mining at the Vancouver Resource Investment Conference, Krauth discussed the drivers behind silver's performance and what investors can expect in the coming year.
Krauth told Kitco Mining that 2024 was a "pretty good year for silver," with prices increasing substantially from a low of $22 per ounce to a high of $35. “From, say, $22 at a low to $35, it's quite a good year,” Krauth stated.
rices, the increase to $30 per ounce has improved their margins. However, he suggests that "they could do with a few dollars more" to feel truly comfortable, especially when considering the acquisition costs of mining assets, which can push all-in costs higher than $30 per ounce. He believes that prices need to be in the "mid to high thirties and even into the forties" for companies to achieve reasonable profits.
One of the key themes discussed was the growing supply deficit in the silver market. Krauth pointed out that "silver mining peaked back in 2016" and that research does not show any "meaningful growth at all in silver mined supply".
This is happening at a time when industrial demand, particularly from the solar sector, is increasing. “Industrial demand overall has been about 50 percent of overall demand. Now if you look at industrial demand in large part because of solar, it's actually moved to about 60 percent of overall demand,” Krauth said.
He notes that the growth of solar has been "almost exponential" over the last few years, with solar representing 20% of all silver demand.
Merger and acquisition (M&A) activity is another factor to watch. Krauth believes that "we are going to see some M&A continue," as producers look for ways to restock their reserves. He notes that companies may start to look at "smaller mid-tiers, and then actually even go to developers".
Krauth also emphasized the potential impact of investment demand on silver prices. While industrial demand provides a "rising floor" for silver prices, it's investment demand that is the "wild card".
"When investment demand comes back... you've got a smaller amount of silver left for the investment side," he explained. He noted the increase in ounces held by the largest silver ETF, SLV, indicating that "the funds flowing there" and the demand for physical silver from these ETFs are kicking in again.
Krauth suggests the conditions are right for a surge in investment demand, similar to what was seen during the silver squeeze in early 2021. “The conditions are right for something like that to happen again,” he said. He believes this could lead to a price spike, though he does not see a "mania phase spike" to triple-digit prices happening this year.
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