Matt Watson: Silver mine supply needs to double, what about prices?
Industrial demand for silver is increasing and, according to Matt Watson, mine supply will need to increase significantly in the near future in order to meet this growing need.
Watson, who is the founder of Precious Metals Commodity Management, said the electric vehicle, solar PV and electronics industries, among others, will all need increasing amounts of the white metal.
“The outlook for industrial demand is rising, there’s no doubt about that,” he told Investing News Network.
“It’s like so many other minerals. We’re going to explode our known global reserves in no time – by the mid-2030s, 2040s. There’s only about 55 years of known reserves and inferred resources left. in silver.”
Watson believes silver mine supply will need to double by the mid-2040s, but noted that silver companies face a host of hurdles when it comes to meeting demand. imminent – including low prices, low grades and regulatory challenges related to exploration, development and mining.
“One of the dichotomies that’s happening here is this transition to clean energy that’s going to help accelerate the demand for (metals like silver). And yet it’s this same community of clean energy advocates that really has a ‘not in my backyard’ mentality when it comes to mining,” Watson said. “If we really want to engage in this clean energy transition, it’s a metals-based transition…we we’re going to need more of everything.”
As silver faces a supply shortage, what is the price outlook for the precious metal? Watson noted that since 2000 it has had an average compound annual growth rate (CAGR) of 8.3%, and he sees that continuing.
“Now as (silver) starts to grow, as I said, in the mid-2030s and becomes more of an industrial metal, then I think you see the likelihood of that 8% reaching a CAGR of 10-12%,” he said, adding that he expects a slow, methodical climb and not an overnight jump to $40 or $50 an ounce.
“So that would put us between US$25 and US$27.25 by the end of the year if you were to stay on that course. I’m still sticking to it, I think that’s about right window where the money will end up by the end of 2022. And (it will continue) to grow beyond that,” Watson concluded.
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Securities Disclosure: I, Charlotte McLeod, have no direct investment interests in any of the companies mentioned in this article.
Editorial Disclosure: JInvesting News Network does not guarantee the accuracy or completeness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the views of Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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