(Kitco News) - Silver is increasingly becoming an industrial metal, said Peter Krauth, editor of Silver Stock Investor — noting industry now consumes 60 percent compared to 50 percent a few years ago.
In mid-January Krauth spoke to Kitco Mining at the Vancouver Resource Investment Conference 2024.
In Krauth’s view, industrial demand forms a price floor for silver, “and it's actually when investment demand comes back in a big way, that's the wild card that starts to really push silver prices higher.”
As to what extent interest rate cuts will influence silver prices, Krauth said if gold pushes higher, silver will likely follow. “It usually does with a lag… but it will catch up to gold and then it will absolutely outpace gold. It has done that multiple times historically. I expect that will happen again this time around,” he said.
Krauth said the silver market is ripe for consolidation, with the pure silver explorers likely to be targets before companies with polymetallic deposits. “The higher-quality ones and in better jurisdictions are going to be become irresistible.”
Krauth believes the disconnect between undersupply and overdemand will eventually lift silver prices. Last year, the Silver Institute predicted industrial demand would grow by 4%, when it actually grew 8%. It expected solar power installations to require 160 million ounces, when the actual number was 190 Moz. Meanwhile, silver output in Mexico, the top producer, was down 12% in 2023, and Peru’s production was at 20-year lows.
“Solar is really the 800-pound gorilla, we can’t ignore it,” Krauth said, noting that new solar technologies are requiring 50 percent more silver per panel in some cases.
“Even if the overall production of panels were flat, we're going to need a whole lot more silver, just for solar. It's going to have to come from somewhere. We've had three years
Of deficits, there's going to be a reckoning and the silver price will absolutely react,” he said.
Coverage of the Vancouver Resource Investment Conference 2024 was sponsored by Snowline Gold.