Silver Eyes $40… $50 to Come?

https://www.moneymetals.com/uploads/content/mike-maharrey-and-dr-vieira-podcast-img.jpg" alt=”Mike Maharrey and Larry Reed” width=”450″ height=”180″ loading=”lazy” />

Mike Maharrey: Greetings. I’m Mike Maharrey, a reporter and analyst here at Money Metals, and I’m thrilled once again to be joined by Peter Krauth. Peter publishes two newsletters, the Silver Stock Investor and the Gold Resource Investor. He’s also the author of a fantastic book, the Great Silver Bowl, in my opinion, one of the best books on silver investing that I’ve seen. How you doing Peter?

Peter Krauth: I’m doing well. Mike, thanks so much for having me once again, if you don’t mind, I just want to make a small correction. The Gold Resource Investor is no longer being published, however, I do publish the Silver Advisor.

Mike Maharrey: Alright, dang I stand corrected.

Peter Krauth: Not a problem.

Mike Maharrey: Now I feel bad, but that’s what happens. You’ve got these bios, I’m sure there’s stuff in my bio that’s floating out there that’s no longer accurate, but anyway, it’s great to have you on and you are a wealth of expertise, especially in the silver market, but also just in resource and energy, commodities and whatnot. It’s always good to get your insights and I want to just start to kind of talk off, talk off, talk about generally the trajectory of silver that we’ve seen over the last couple of months. As most people are aware, we had a pretty good rally over the last couple of months and we actually saw the price of Silver Touch $40 an ounce at one point. Now it’s given up some of those gains. I think it was around 37 50 as we were talking this morning, which is a few days before the episode will run, but we seem to be in something I guess, of a consolidation phase. So, I’ve got two questions for you. The first to what do you attribute the big rally? Kind of what sparked that run up that we saw? And then second, is there more to come or was that the one shot in your view anyway?

Peter Krauth: Well, so let’s go in order. What sparked it? Always tough to say, but I do think that the market is finally digesting the fact that silver is undervalued relative to gold and undervalued relative to its utility and the level of demand. And so, I’ve been saying for about a year and a half now that the problem with the silver market is that there’s not enough of it. We’re consuming more than we’re producing. We’ve been able to tap into these above ground secondary supplies, these inventories. So, the big consumers like the manufacturers of things like solar panels or electronics that consume a lot of silver, have had the luxury of going into the market, buying silver that’s been stockpiled for years, not put pressure on new mining to supply new silver, to bring new supply of silver to market and draw down on these supplies. Well again, I think the market’s realizing that this is a game that has a limited life, we’re getting closer and closer to the end of those stockpiles.

I would say we’re probably somewhere around three quarters through those stockpiles, there’s always the argument that there’s a lot of privately held silver, silver hoards, hard to estimate, probably a few billion ounces and that will come to market. And I think that what we’re seeing in the silver price proves or is starting to prove out my view of it, which is that yes, that will come to market, but only at a lot higher prices. So, you’ve got some detractors who are going to say, ‘Oh, there’s always plenty of silver.’ And I say, yes there is, but at higher prices. So, I think that’s what we’ve seen happen that’s driven the market. We’ve seen it kind of move in steps. In fact from I think it was about it had a dip in April to right around 30, but then quickly to 32 again, then to 34, a little bit short time, not much then to 36, then to 38 and 40.

Now we’re back to 37 and a half. I think that we do have this consolidation phase to work through gold. We could see a little bit regained strength in the dollar that sold off pretty quickly. I’m not sure that’s over with. I don’t expect it to last, but if we do see a bit of a bump higher in the dollar, we could see some renewed weakness in silver and I think it could bring us down to 34, maybe even 32, wouldn’t expect it to last. But second part of your question was about where it’s going and I do believe it’s going a lot higher. I said that we would see $40 in the second half of this year. If you look at the futures price, we’ve touched that already. I think we have reasonable odds of seeing 45 by the end of this year, and I do think that sometime during 2026 we’re going to see that $50 all time high taken out. We’ll see how much beyond that it goes, and it may not happen on the first try, but I do think we’re going to see that we touched for the third time in history.

Mike Maharrey: Yeah, would you agree with me, I think that even with the rally that if you look at the various dynamics, you look at the gold silver ratio, you look at the supply and demand dynamics, I would argue that we still have underpriced silver. Would you agree with that? Oh,

Peter Krauth: Most definitely, most definitely. Because, if you just look at the level of consumption versus supply and you look at the gold silver ratio, which some people will say has only sort of limited value, but nonetheless, many people will follow it. And I think kind of technical analysis, the fact that enough people follow it gives it some weight. So it is almost like one of these self-fulfilling prophecies. And so, the ratio is still high where I think 83, 85 or something around those levels right now, historically the last say several decades, it’s been closer to about 55 or 60, and when it dips and heads towards that level, it tends to overshoot. And so, wouldn’t surprise me to see it go ultimately somewhere down to around 40. So we could see a lot higher silver just on that basis and based on the demand factor. So yeah, it’s still absolutely undervalued in my view. And we’re starting to see, I think more and more people, investors, participants, players come to that conclusion. In fact, I saw a statistic this morning that I think it was in the month of June this year, silver ETFs saw bigger inflows in June alone than in all of last year.

Mike Maharrey: Yeah, that’s amazing.

Peter Krauth: Someone’s starting to really pay attention and buy into silver. The dealers, you get kind of mixed feedback from the dealers. They’re saying that they’re actually buying somewhat more, but there is certainly buying back, I should say somewhat more, but there is certainly some interest and there’s a lot of flow into the sector. But yes, plenty of upside left.

Mike Maharrey: Yeah, I love the point that you made about pulling from the private stocks and that yes, that’s a thing, but it’s going to require higher prices. And it made me think about, I get these texts all the time, Mike Meharry, are you interested in selling your house at my address? And I mean generally speaking, we bought this house with the intention of retiring here, so it’s really not for sale. But I mean if somebody came along and said, I’ll give you a million and a half for it, well heck yeah, exactly. Things are for sale. It depends on the price and I think that’s a really good point when you’re talking about silver people, they’re holding onto it for a reason. They’re not going to just let it go just because somebody says, ‘Oh, we need it.’

Peter Krauth: Absolutely.

Mike Maharrey: I’m interested in your thoughts on how the tariff concerns have impacted the silver market. I know for gold there was kind of an initial panic and that settled out because it became pretty clear that there was not really any intent to tax the investment side, the metal itself. But obviously tariffs are still going to impact electronics industry and a lot of these industries that use silver. What have you kind of seen the impact being with the trade war?

Peter Krauth: So, it’s been similar in terms of the concerns about tariffs being applied to silver. We saw, I’m going to say around the same times during the same months, we saw these big flows of silver from London to the US. So ,these traders and participants were trying to get ahead of that, wanting to have the metal in the US so they wouldn’t be hit by tariffs. Those never occurred, they never happened, and we’ve seen some metal flow back towards London. But what was interesting was that when we saw this metal flow into the US, it wasn’t all going to the exchanges. A lot of it was going to private warehouses in many cases in the New York City area. So, you’d think with the investment banks mostly set there and a lot of the storage in that area that it’s always hard to say, but you’d have to think that there was some view that we needed to get ahead of this and we wanted the real metal lease rates have gone up.

There’s a premium for physical that is higher than average. In other words, anybody who wants the silver is no longer being as comfortable as they were in the past. With Silver Futures, they’re ready to pay extra to have the physical. And so that’s why we’ve seen these premiums go up as well. It’s interesting what happened with copper. I think kind of what we’ve seen with maybe this recent albeit sort of limited pullback in silver is that silver has had a growing industrial component versus investment. I think we’re going to continue to see that on balance continue to rise or at least stay quite high utility of silver. I mean it has the second most applications of any commodity after oil. So, that’s really tremendous when you think of the size of the silver market versus the size of the oil market, I mean it’s less than a rounding error compared to oil and you’ve got patents being filed every day practically for silver uses.

So, it really is kind of a wonder metal and we’re discovering ways to use it all the time. So I think, like I say, similar to copper, we’ve seen it pull back a little bit recently because there’s so much utility for silver industrially, but I think that the market’s discovering the investment side of it, and I think that’s been underestimated by the Silver Institute. In fact, I was looking at some numbers just before I hopped on this call with you, and what was interesting to me is that if you look at when I get to those numbers now, if you look at the overall deficit that’s forecast by the Silver Institute for this year, it’s slightly lower than it was for last year. So, we’re talking about, they’re saying about 117 million ounces versus about 148 million ounces. But if you add in the net investment into physical silver and then net investment into Silver ETFs, then you’re looking at the third highest silver deficit that we have on record. So, that’s why I say I’m wary of underestimating what investment demand will be for silver. I think that it’s going to have a much higher impact than a lot of the market pundits are expecting.

Mike Maharrey: Yeah, it’s interesting too, if you look at some of the jewelry markets in the big ones like China and India, I know specifically in India there’s been a little bit of a pivot towards silver jewelry and also silver investment as the price of gold has priced some folks out of that market. So, sometimes you’ll hear this saying, poor man’s gold, I don’t really like that, but the implication of it. But I mean it is true in some ways it is an easier price point and easier way for folks to expose themselves to precious metals.

Peter Krauth: Most definitely. That’s a great point because I think India is underestimated as a market for silver. And yes, they do love their gold and in so many places gold is sort of the first choice, but because gold’s gotten so expensive on a per unit basis, we’ve seen them shift to silver. We’ve seen them shift to gold plated silver, and in fact, in places like Turkey and Egypt where culturally gold is important as gifts for newborns, for weddings, we’ve seen them shift from gold to gold plated silver, you’ve seen that there as well. So, the silver is really taking on and from what I’ve seen as well, just on a sort of a pure fashion trend, silver is actually gaining pretty quickly on gold. Maybe some of it’s the pricing and apparently the margins on silver jewelry are much higher percentage wise than they are on gold. So, the jewelers have a lot of motivation to keep pushing the silver and apparently, it’s in so expect a lot more consumption.

Mike Maharrey: You mentioned silver and copper and I’ve kind of noticed, and actually one of the analysts over at Money Metals wrote an article about how the copper and it kind of signaled the surge that we saw in the price of silver. Is this typical or is this something that’s kind of an anomaly? How do you tie those two metals together in your head?

Peter Krauth: Well, I think kind of like what I was saying earlier, I think that in the past it may not have been as typical. I think that it’s becoming more typical because of silver’s increasing use industrially and copper is clearly not an investment metal. It is purely an industrial metal, both have implications for electricity, conductivity, all of that. So they have a lot of things in common on the industrial side. And so it’s not surprising that silver becoming more industrial is going to start to act in some ways more like copper does. Obviously that’s limited because silver has this big investment component and true money component. But yes, the parallels are there for sure, and I would expect that to continue to a fair extent going forward.

Mike Maharrey: Yeah, yeah, that makes sense. Speaking of the industrial demand, there’s kind of an increasing focus on defense spending, especially in Europe. I think they’re feeling like the United States may not be quite as involved in European defense. So, you’re seeing a lot of plans for military and defense spending over there. And I know that obviously silver is going to be an important component in a lot of these defense things because electronic, I mean missiles are electronic guidance systems, all of this stuff. Do you have any sense of how much this could impact the silver market in terms of increasing demand? I guess I imagine it’s pretty hard to even come up with numbers about how much the defense industry uses. Do you have any sense of that at all?

Peter Krauth: So you’re right, and I don’t think by accident that a lot of the stats on that are impossible or difficult or impossible to come by. I’m trying to remember because I have, in fact, what I can do for you is at least point your viewers to somewhere where they’ll get some answers. And so interestingly enough, the silver chapter of the end goal, we trust report from 2025, which is put out by In Gold We Trust. So, anybody wants to look that up, go to Ingle, we trust, I think it’s report or you’ll find this year’s, you can download it for free. This year’s In Gold We Trust report and if you go to the silver chapter, a guy by the name Ted Butler, who by the way, we just has just joined our team and is going to be working closely with me to research and work on my new service Silver advisor, he wrote the silver chapter, he’s written it three years running at In Gold We Trust, and he talks about the specifics of the defense industry.

And so again, I hate to admit that, I don’t know those numbers offhand, but he did demonstrate that to a certain degree that it was likely to be pretty significant. He did. You did things like the trends in Europe, for example, to spend a lot more militarily. There was, I think it’s constitutional changes even in Germany where they were allowing things like more defense spending. They were allowing bigger deficits for defense. And all of these kinds of things are really shifting towards, as I say, bigger defense spending. I mean we’re talking about I think a trillion dollars over the next few years in Europe alone. And so as you say, you this in missiles, you find this in all sorts of electronics. It’s very, very sophisticated. Now all the military applications are all sort of computer slash electronics oriented and things of things like drones, think of things like missiles vehicles.

It is really everywhere. Just you’d think of even laptops or tablets that they’ll use in the military. It really is everywhere. And so there’s no question in my mind, again, the estimates are difficult to come by in terms of what it might implicate imply in terms of the actual silver from memory, I believe it could be somewhere around 5% of the overall market currently. But the kind of spending that we’re talking about could certainly easily add a few more percent. And when you think that we’re already not only in deficits, but we’re barely able to grow supply at all from mining and we haven’t seen any kind of realistic growth from recycling, which is really only about 15% of annual supply. This is just going to exacerbate these deficits and it’s sort of that next sort of marginal ounce of silver at what prices is it going to come to market. And that’s what we talked about at the beginning. So yes, there’s this silver in private hands, yes, it’s likely to come to market, but at much higher prices. So, I think that again, defense is just going to contribute that to that and exacerbate those deficits.

Mike Maharrey: Yeah, absolutely. Talking about the supply side of it, it’s interesting because most of the silver that we get actually comes from secondary mining. So, you’ve got somebody that’s mining zinc and they get some silver and they sell that on the side. There’s not a lot, at least relative to gold of standalone silver mines. First off, why do you think that is? And then second off, do you think that if the price gets high enough, we might see some more dedicated silver mining or is this just the way the industry is wired to operate?

Peter Krauth: So, why that is, I think it’s just sort of a freak of nature is that you just don’t find many deposits that have silver by itself or where silver is really mostly the dominant metal. You tend to find it. I mean these are the simple stats. About 25% of mine silver is from primary silver mines. So, that’s still not just silver, it’s just that you get mostly silver out of those mines and 75% is as a byproduct. So silver is a secondary metal in those mines. So, we’ve probably talked about this before, but it’s probably also worth repeating that. Think about a miner whose secondary metal is silver already. It’s hard to try to just ramp up a mine if the metals prices go. So, imagine where silver is a relatively insignificant byproduct that you’re producing well silver at say $35 or so, $37 today, they’re very happy to get that price.

Frankly, it could go to 50, they’d be happier. Are they going to try to ramp up their production because silver has gone to $50 when it’s a small additional source of revenue for their mine, unlikely it’s demand inelastic. In other words, if silver demand goes higher, they will not necessarily produce more. They will just simply, in fact, they may produce less because they may focus on areas of the deposit that are lower grade because prices are now higher, they can generate the same profits producing less metal and so that they don’t care, less metal comes to market and they’re getting a high price for it. You could actually get the reverse where higher prices will bring you less silver to market. It’s just as crazy as it might sound. Economics 101 in reverse, it just makes zero sense. But if you think about the underlying reasoning, it does make sense. So that’s really something to keep in mind.

Mike Maharrey: Yeah, that’s really interesting. But you’re right, it does seem backward, but if you really think through it carefully, it does absolutely make sense. It’s not like that they set out this is a bonus. So obviously we’re not going to make significant business decisions. If I sell hats, and I sell a few pins on the side, I’m not going to change my hat business based on pin production or whatnot. So yeah, absolutely makes sense. Lemme get you out on one more, and this is kind of a more of a general question, and we’ve seen throughout history that when you have a gold bull market, silver typically tends to lag. You will see the silver rally occur later within a gold bull market. We saw it during the pandemic, we saw it in 2008. We’ve seen it numerous times and I’m kind of curious and we’re seeing it now too, right? We’ve been in this gold bull market for well over a year now. Is this a psychological phenomenon that’s happening that plays out or is there something technical in the market? What do you attribute the fact that silver tends to lag gold?

Peter Krauth: So, I would say that for the most part it is psychological. I think it’s just very simply that silver is a smaller market. Gold is king when it comes to precious metals. People will pay attention to gold first. As you know, most participants will be late to market. They’ll jump on the wagon like they do with so many other things that run and wait and watch gold and watch gold to go to three, three and a half, four, five. Well higher than that believe ultimately anyways. So eventually they’ll start paying attention to gold. By the time gold is let’s say four $5,000, silver is probably going to be 50, 60, $70. And then they’ll start to realize that, wow, gold at $4,000. I mean that’s really steep. How much gold am I getting for I’m getting an ounce of gold? Well, if I spend $4,000 on silver, I’m getting a lot more ounces of silver.

So, that’s what I think happens is that the attention is paid to gold. You see it run, people come to it late, do the math, make their assessment realize that it’s not cheap for the unit value and what are my other options? And silver has always been that natural alternative and I think that’s why you see that happen. And just people being sort of, like I said, it’s this whole psychology around bull markets that people are late to these markets and then they tend to come in huge ways like a tsunami and start buying like crazy and then push these things to massive overvaluation. And so that’s what I think happens. And being a smaller cousin, being the smaller market, it’s talked about a lot less. And so it doesn’t get that attention, but it does get it later, and that’s when you see that catch up, it surpasses gold. And I think it’s something like seven of the last nine gold bull markets. Silver has outpaced gold in terms of returns. Again, most of them came later in the market, but if you held from the same start to finish for both metals, you did better in silver again with that coming later.

Mike Maharrey: Yeah, absolutely. It’s interesting too because the spreads are significant hundreds of percent on the silver side. So I’ve always been a big fan of silver just for that reason. I think a lot of people maybe are frightened by its volatility. I mean if you look at the percentage swings, you go from nearly $40 an ounce back to $37 an ounce, that’s a pretty big percentage. Absolutely. And I think a lot of people look at that, but like you say, over that long haul, and even now, I think a lot of people are kind of like, oh, silver’s been such a laggard and yet if you look at gold and silver this year are basically neck and neck.

Peter Krauth: Exactly.

Mike Maharrey: And so it’s interesting because if history proves out and we do see silver significantly run up compared to gold, then we’ve got a long way to go up upside for silver. Well, me, I’ll give you an opportunity to tell folks where they can find you can avail themselves to the newsletter that you publish. And also tell them, just give a quick pitch for your book.

Peter Krauth: Oh, well thanks. So they can find me. My newsletter is Silver Stock Investor. You can go to SilverStockInvestor.com. And I’m also partnered with Jeff Clark of the Gold Advisor. You can go to the goldadvisor.com and see everything about my newsletter’s there. I’m active on X, the former Twitter, you can find me on LinkedIn. And my book was published a little over three years ago, the Great Silver Bull. It’s been a lot of fun, a lot of really positive feedback that I’ve gotten on that. People have said that they’ve learned a lot about the silver market and how to get involved in it. And to your point, just for a minute, you were saying about people being afraid of the volatility. Well, I addressed that actually in the book, and I say you need to use that to your favor. It’s true. It is there.

But I think that for even the most conservative investor, there’s a place for silver in their portfolios. It may be reduced, it may be relatively small, but its contribution is so high. In fact, there was some research, again, I’m going a little bit off track, but I think it’s worth mentioning. It was some research, I think it was Oxford Economics, it was sponsored by Silver Institute, this was about a couple of years ago. And they looked at silver’s contribution to a portfolio, and I believe it was a medium risk portfolio would have, the ultimate contribution was like 6% exposure to silver. And we were at something like 0.1%. I mean, the multiple that we would have to go to in our portfolios for people globally to get the proper exposure to silver, to have the ideal exposure, to minimize risk and maximize your returns, which is what you’re always trying to do from a portion of a percent to 6%, is a huge jump. And so as I say, that proves out that silver has a place in everyone’s portfolio. It’s a matter of degree, I think, in terms of everyone’s comfort for their risk tolerance. So yeah, I mean the book is an overview of the whole market and I think a great introduction and the newsletters are really more real-time analysis for interested investors. And they do deal with things like silver ETFs, but also mining ETFs and mostly mining stocks, to be fair.

Mike Maharrey: Yeah, whenever I have you on, I always brag on the book because you can actually, we’re not doing video, but if you could, it’s actually behind me right here. But it is so well done. And I love the way you organized, and I’ve said this before to you, but other folks that might be listening may not have heard those earlier interviews. And the way the book is organized, the way it’s broken down, it’s user-friendly, almost like a manual where you don’t have to sit down and read chapter one, chapter two, chapter three. You can pick and choose things that are interesting to you at the moment. So, I don’t mean to pitch your book, but I’m pitching your book.

Peter Krauth: Well, thanks for that, Mike. And I do want to say that there’s one fund manager, which is a rare thing these days, but who runs a fund that specializes in silver equities only, so silver stocks. And she told me I’d gotten a copy out to her shortly after it was published. And when I saw her the time after that, she said, oh, she said, I love the book. She said, it’s like a reference guide for silver investing. And I hadn’t thought of it that way, but I guess based on your feedback too, it kind of makes sense, right? If you want to know everything about the silver market, why silver and how do we ultimately invest in silver? Hopefully that’s your guide for it.

Mike Maharrey: Yeah, perfect reference guide. That’s exactly the words that I would’ve used if I had thought of them, but I did not. Well, as always, I really do appreciate you taking time out of your day to spend a little bit with me. I know you’re a busy man, and we always appreciate your insights and I just love talking to you. You kind of prove the stereotype that Canadians are friendly. So, I appreciate it.

Peter Krauth: I appreciate it!

Mike Maharrey: Alright, well thank you again and I’m sure we’ll have you on here again in the near future. Thank you so much.

Peter Krauth: Thank you, Mike. Always a pleasure.