Demand for silver is reaching a “perfect storm” after an increase in investment demand combined with a drop in supply, according to Blue Line Futures strategist Phillip Streible.
— Phillip Streible (@PStreible) May 16, 2020
Streible drew his evidence from the recently released Industrial Production and Capacity Utilization report for April, which saw the biggest-ever drop in industrial production (11.2%) including a 6% drop in mining for the month. He suggested that this would cause a squeeze of the silver supply.
If Streible is correct, silver could easily follow in gold’s (XAU) footsteps. Gold has got a boon recently in the wake of feverish Coronavirus spending, stoking concerns of inflation in the future, sending it to retest its highs.
Silver’s highs are 200% above its current price, at around $50/ounce.
Silver is not only a purely speculative precious metal, but also has a significant use in industries like automotive and solar power production.
The Financial Times generally does not agree with Streible, writing recently that other analysts forecast a 7% drop in demand.
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