Financial investments to stimulate the next money boom amid doubts about industrial demand


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Financial investments through exchange-traded funds and related products will lead to the next surge in silver prices, according to a new study by independent Australian analyst Jean-François Bertincourt, amid a debate over the strength of the growth of industrial demand in the future.

Analyst Jean-François Bertincourt.
Source: Jean-François Bertincourt

The valuation tracks silver supply and demand, compares the metal’s market size and price volatility with gold and gold / silver ratio, and then rates ASX companies exposed to silver at the help with mineral resource and capital expenditure references.

Bertincourt’s analysis found no discernible market trends by tracking silver supply and demand since 1999 – evaluating a variety of uses including jewelry, electronics, coins, and bullion , ethylene oxide, photovoltaics and silverware – apart from the decline in use in photography.

While miners exposed to silver hoped that its use in solar panels would be a way for them to take advantage of the “battery mineral” investment theme, which has not steadily increased. Meanwhile, the proportion of industrial use of silver has declined between 50% and 60% since 2010, compared to 70% in the early 2000s.

Given this trend, Bertincourt concluded that the financial sector‘s investment in gold and silver is likely to lead to the next surge in silver prices, especially against the backdrop of the “stagnation” of silver. global demand in a context of uncertain industrial demand due to persistent trade uncertainties between the United States and China. and the European Union.

This contrasts with the boom from 2010 to 2012, when silver investments soared more than 48%, at the start of which mining producers ended a four-year period of de-hedging, government sales shot up. sharply rebounded and the availability of scrap reached a new record. to 215 million ounces.

“Given trade issues such as those between the United States and China, it is difficult to see industrial demand increasing substantially. [silver] price, ”Bertincourt told S&P Global Market Intelligence.

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Much of this financial investment will likely take the form of ETFs, which have seen some correlation with silver prices.

The iShares Silver Trust, a direct silver bullion ETF, has nearly $ 5 billion in assets under management, more than the other 11 major U.S. silver ETFs combined, Bertincourt noted.

While the annual silver supply is around 1 billion ounces compared to 144 million ounces of gold, the market value of the yellow metal is 11 times higher when you combine the annual supply with the ETF holdings at the end of the year.

Bertincourt said this was a key factor in the higher volatility of silver, as currency movements had a greater impact on the price of silver than the price of gold.

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Meanwhile, the gold / silver ratio is currently around 80: 1, which is much higher than the five-year average of around 50: 1, a sign that is often the “forerunner of a [silver] Bull run, ”said the Managing Director of Silver Mines Ltd. Anthony McClure at the Denver Gold Forum in September.

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Jean Lamb.
Source: Myanmar Metals

The CEO of Myanmar Metals Ltd. John Lamb, who posted a taped interview with Bertincourt on the analyst’s silver coin at ASX on October 3, told S&P Global Market Intelligence that if the gold / silver ratio “normalizes” to its average in the long run, silver should be in the US $ 20 / oz “before too long” range.

He said the growth of advanced electronics, solar power and biotechnology – the main industrial engines of silver – would increase the price of the precious metal, and is particularly “Good value” for investors compared to gold, considering that gold is about 15 times rarer than silver in the earth’s crust, yet it is 85 times more expensive.

He also pointed to the lack of good silver projects on the horizon, citing Bertincourt’s chart that named Myanmar Metals’ Bawdwin project in Myanmar and The Cannington mine of South32 Ltd. in Queensland, Australia, is the only “world class” project based on its mineral resources and silver content.

Of the other two projects with significant silver grade and silver content Rio Tinto’s Berenguela project in Peru and Red Metal Ltd.’s Maronan project. in queensland Bertincourt said the latter is a type of deposit similar to that at Cannington, offering significant deep exploration potential.

Unlike pure silver coins, Lamb said polymetallic projects like Bawdwin can also benefit from rising prices of other commodities, which in Bawdwin’s case is lead, which Lamb says has good prospects because every electric vehicle still has a lead-acid battery like every carbon car.

Lead or acid batteries are still the only technology that can cost-effectively handle the charge / discharge tasks required for a car’s 12-volt accessories, he said.

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