Does Silver Really Have A Chance To Hit $140?

Even the most fanatical of the silver bugs tend to keep their estimates for silver prices in the double digits. Cautious investors might see $20 per ounce on the horizon, $25 per ounce if they’re optimistic. But the precious metal, which once hit an all-time high of about $50 per ounce, could conceivably ascend to $100 per ounce and above. At least, that’s the conclusion you have if you listen to some of the boldest predictions out on the market today.

This Isn't A Shot In The Dark

This isn’t just an odd prediction coming out of nowhere. Canadian silver miner First Majestic Silver Corp (“AG” on the New York Stock Exchange, and a familiar face to anyone who’s followed this space this month) believes that a shortage in silver could trigger a price increase of up to 775%.

The reason, argues First Majestic Silver Corp, is that silver’s usage in electronics, like smartphones and tablets, makes it a necessary commodity in today’s high-tech consumer environment. First Majestic CEO Keith Neumeyer says that he sees hints of a looming shortage in silver, as a major Japanese electronics company approached him looking to lock down the price of silver. “For an electronics manufacturer to come directly to us - that tells me something is changing in the market,” said Neumeyer.

Citing silver’s use as an industrial metal as well as a precious metal, Neumeyer believes that silver’s relative cheapness to gold and its quality of high electrical conductivity make it a natural high-demand metal in this market. And if there is, indeed, a shortage of silver supply looming, that could suggest that the precious metal is, indeed, highly undervalued.

Silver’s Role As A Dual Metal

Although we all know the many benefits of gold as an economic commodity (some people believe that it’s the simplest form of wealth for investors, even though it’s not a legal form of currency), silver has an interesting role in our modern society. Because of its extreme ability to efficiently conduct electricity, it’s ideal for small electronics. Anyone who’s paid attention to the tech world over the past fifteen years knows just how important it is to have small, capable electronics.

But that hasn’t driven up the price of silver too high, even as products like the smartphone and the tablet have risen. So, what’s happening here? The simplest explanation is that supply has risen to meet the new demand. What Neumeyer appears to be suggesting is that supply isn’t quite as unlimited as some silver investors seem to think. Consequently, this translates into major silver-price increases in the future, if that prediction holds up.

$140 is a bold prediction for the price of silver. And with a potentially strong dollar this year, there is a ceiling to silver’s price-raising capacity. But if you’re interested in an affordable hedge not named gold, then silver stocks and silver bullion might still be one of the most intriguing stores of wealth you can acquire. Keep an eye on silver supplies this year to see if that prediction is coming true or if silver is simply holding the same pattern.