Silver prices have swung between a 52-week low of $13.95 to a staggering high of over $17.50 in the last year.
While silver gains have cooled over the last month, there’s plenty of evidence that the precious metal will climb to new heights in 2019.
You see, Money Morning Resource Specialist Peter Krauth believes there are three key catalysts that will push silver higher – and generously reward silver bugs in the process…
Silver Price Catalyst, No. 3: a High Gold-to-Silver Ratio
Investors have relied on the gold-to-silver ratio to determine the market price of silver for centuries. It’s simply the price of gold divided by the price of silver and helps traders keep track of the price relationship between the metals.
Liquidity moves markets!Click here to learn how you can follow the money.
Currently, the gold-to-silver ratio is 85. This is the highest ratio in over two decades. And that’s bad news for silver – a high ratio indicates less market value.
However, history tells us it won’t remain this way for long.
Powerful Investment Income Stream: The Treasury is sitting on an $11.1 billion money pool. By adding your name to a special distribution list, you could begin collecting $1,795 or more every month. Get the details…
The last three times the ratio rose above 80 were in 2003, 2008, and 2016.
In each of these three instances, the ratio quickly slid following the peak, as the price of silver rose rapidly.
After the gold-to-silver ratio’s peak in 2003, silver prices advanced more than 60% in the following nine months.
In 2008, silver prices surged 128% in the 11 months after the ratio rose above 80.
And after the peak three years ago, silver prices increased 28% in the following four months.
Krauth expects the gold-to-silver ratio to fall roughly 65 points following this historic peak.
This would send the current price of silver to new highs and deliver investors a handsome return.
And it’s all the more likely to happen due to the next catalyst…
Silver Price Catalyst, No. 2: Rising Inflation
Inflation is rising, and that’s a bullish sign for silver prices.
The United States Bureau of Labor Statistics annual inflation rate metric rose 2.5% two times in 2016 and continues to trend higher.
That’s because the purchasing power of the dollar drops as the cost of goods becomes more expensive.
The U.S. Consumer Price Index, used to measure the buying power of the dollar over time, has risen consistently for the last 10 years, jumping as much as 2.5% in 2018.
This has set the stage for a surge of interest in silver as investors buy up hard assets that can weather the impact of rising inflation on the U.S. dollar.
And silver prices are currently low, which makes the precious metal an even more attractive acquisition.
Both inflation and the high gold-to-silver ratio are likely to push silver prices to new highs in 2019.
However, there’s one catalyst that makes this jump all but certain…
Silver Price Catalyst, No. 1: Decreasing Production
Several geopolitical trends could lead to declining silver production in 2019 – a development that would send silver prices through the roof.
You see, Mexico, one of the top-producing silver nations, is drawing down production.
In 2017, Mexico mined 5,600 metric tons of silver, over five times the 1,020 metric tons mined that year in the United States.
However, the new Mexican presidential administration intends to introduce new environmental and health legislation that may target silver mining practices.
This is on top of proposed legislation that moves to halt mineral exploration in silver-rich regions due to conflict with local communities.
Even the proposal of laws like this has the potential to dampen investment in Mexican silver production.
As a result, Mexico, a large supplier, may be producing less silver in the future.
But there’s one other factor that’s likely to depress silver production going forward.
Just 33% of all silver comes from mining. The remaining 66% is a by-product of other metals, including copper (22% of silver), zinc, and lead (a combined 34% of silver).
As a result, organizations mining these metals are disposed to mine more when silver prices rise. They look at the prices of their primary product. And all these metals have had struggling prices recently.
The bottom line is the less silver being produced, the greater the upward pressure on silver prices becomes.
And today’s tightening demand favors far higher silver prices in 2019.
Now, investing in silver is a solid way to gradually grow your wealth.
However, we have another method that can deliver even greater returns than the precious metal…
About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.
Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.
Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.