Weak economy, contracting production plus strong demand could push silver price to $40 by mid 2022
(Kitco News) - The price of silver could possibly surge to $40 an ounce bymid 2022, James Anderson, CEO and Chairman of Guanajuato Silver Companypredicts. But Silver has continued to underperform 2021 estimates, currently hoveringat about $23 an ounce.
Anderson explained why he is so bullish on silver. "If we have a weak economycoupled with a drive towards needing and using more silver, you're going tohave base metal mines shutting down that produce silver as by-product, just asan enormous demand for silver comes to the fore," he said. "In thatenvironment, you could easily see silver go to the $40 price range. But it ismore likely we will see silver at $30 before it hits $40. I can see it hitting$40 halfway through next year."
Anderson, who is also a 20 year veteran of the financial services industry,spoke to Michelle Makori Lead Anchor and Editor-In-Chief of Kitco News.Guanajuato Silver Company (GSilver) is a Canadian based mining developmentcompany engaged in reactivating past producing silver and gold mines nearGuanajuato, Mexico.
Anderson spoke about silver as a play against thedevaluation of currency, and at the same time silver's demand for industrialuse. "Silver is a unique hybrid of those two things. It's what causes thevolatility that silver has," he emphasized. "But going forward, the additionaluses of silver in the solar panel industry, and in the electric vehicleindustry, those uses are well documented too."
"There is no large supply above ground of silver, whereasthere is a large supply of above ground gold. So when a supply demand crunchcomes on silver, it could affect the price very dramatically, and in a veryshort period of time," he added.
"I think as governments around the world continue to destroythe intrinsic value of all of the Fiat currencies - all of the paper currencies- not just the U.S. dollar, but also the Euro, Wan, Yen, British pound,Canadian dollar, there will be more and continued strength in silver and gold,"Anderson said.
The Biden administration has shut down pipelines,implemented additional oil and gas regulations, and effectively made the U.S.dependent on foreign oil once again. At the same time, there's been anaggressive push to decarbonize. Anderson spoke about the impact these policiesare having on the energy markets.
"Simultaneously, we have all kinds of different componentsto the energy market -- restricted and constricted. At the same time there is alot of new, fresh demand for energy. And that energy is coming from variousplaces," Anderson said. "In a very similar way, you can have a constriction ofsilver production and at the same time have a large spike in demand."
In terms of the biggest risk the markets are facing Anderson said, "It would bea fairly sudden deflationary implosion. We have inflated and inflated andinflated our way into higher asset prices, whether they be stocks or realestate around the world," he emphasized. "There's a very grave risk if there'sany sense of tapering, or interest rate rises, or even just the hint of that orthe hint of taking away some of the further stimulus. In that case, it would benatural to have a sharp, shock to the downside in equity markets, and certainlyother asset markets around the world."
Anderson also discussed the impact a deflationary implosionwould have on gold and silver. "Gold could have a sharp shock to the downsidebefore it starts to recover very quickly and very powerfully," he said. "Silverwould be that in spades. In this type of deflationary event there would be nobids on anything for a brief time period. That will be the case for silver aswell. I have no idea of how far the price will fall, but it will recover verysharply as well."
Anderson also discussed his new project in Mexico. "We have become Mexico'slatest silver and gold producing company. We are producing silver and gold atthe El Kubo mine in Guanajuato, Mexico," he explained. "We would have notgotten into this venture had we not been positive and bullish on the prices ofprecious metals, specifically silver. Silver will always be more volatile thangold. That's just an historical norm."
Guanajuato Silver is focused on the refurbishment and swiftre-commencement of production at its El Cubo mine and mill, and it's nearby ElPinguico project, as well as the delineation of additional silver and goldresources through underground and surface drilling.
For more on Anderson's views on silver, pleasewatch the full video above. Follow Michelle Makori on Twitter: @MichelleMakori
By Michelle MakoriFor Kitco News
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mmakori@kitco.com www.kitco.com