(Kitco News) - There has been a significant drop in silver inventories across major exchanges over the past few years, according to Peter Krauth, Author of The Great Silver Bull and Publisher of The Silver Stock Investor. "Each and every one of those exchanges has seen their overall silver inventory drop about 30 to 40%." Krauth highlighted the risks associated with the futures contracts market, where a mismatch between the demand for physical silver and the available inventory could lead to disruptions. "All it takes is for one big consumer to... say, 'I want my silver.' And for the exchange to say, 'oops, sorry, we're out of silver,'" Krauth explained in a recent interview with Jeremy Szafron, Anchor of Kitco News. This could be a possible scenario where the market could be significantly impacted if exchanges fail to meet the physical silver demand.
Analysts have noted declining silver vault levels worldwide, particularly in New York and London. The registered silver inventory on COMEX has decreased significantly, falling by nearly 70% over the past 18 months. Similarly, the LBMA in London has seen substantial reductions in its silver vault levels, with a notable drop of 45,166,000 troy ounces in one month alone. This situation has raised concerns about the potential for a physical silver supply shortage if the current pace of withdrawals continues.
Krauth also pointed out the increasing industrial demand for silver, especially from the solar sector, as a critical driver of the market dynamics. The robust demand for silver in industries like solar power juxtaposed against the dwindling silver inventories suggests a tightening market that could push prices upwards. "If you're looking at the silver market, really, if you're not paying attention to what's happening in solar in particular, then you're really missing, I would say, probably the biggest single driver," he said, indicating the substantial influence of the solar industry on silver consumption. Krauth’s analysis aligns with the broader market sentiment, predicting a bullish trend for silver prices, with expectations of reaching or exceeding $30 per ounce by 2024 due to factors like diminished interest rates, robust industrial demand, and renewed investor interest, especially in the solar energy sector, which is experiencing significant growth.
To learn more about Peter’s silver outlook and find out more about the supply and demand dynamics, please watch the full Kitco News interview above.