In an interview on April 5, 2016, Mark O’Byrne of Gold Core.com predicted that silver will soar to $150 an ounce.
O’Byrne said he was amazed at how “little coverage silver gets.” For several years, gold and silver have been the top performing assets over 5 and 10year periods, yet the media pays little attention to silver. He argued that one reason might be the fear of silver’s volatility. That fear, he said, is “Often greatly exaggerated.” Silver’s volatility over one year is 28, while the Dow’s volatility is about 18. He said, “Not a huge amount more.” Furthermore, individual shares have much greater volatility than silver, yet no one recommends not investing in Apple because of its volatility.
In the 1970s silver tripled in value from $50 to $150/ounce and, O’Byrne said, “I think silver will replicate what it did in 1970s.” He predicted that we are either going into stagflation, high inflation or even hyperinflation, all of which would help the price of silver. Furthermore, he argued, silver is “very, very undervalued.” In 2011, silver was $50 an ounce. Now it is $22, down 60% from two years ago. It has been a “Very sharp correction.” O’Byrne said that in the 1970s during the bull market in silver, there was a period in 197576 when there was “a very sharp correction.” Most people thought the bull market was over, but just a few months later there was another big run up. In 19761980, he said, silver “went parabolic. We believe the same thing is going to happen now.”
O’Byrne said that investment and industrial demand makes silver “absolutely unique.” Gold is only an investment, with limited industrial uses. Platinum and palladium are almost purely for industrial use. Silver, however, is about 50/50 industrial/investment. If central banks manage to patch the world’s economies together and get some form of economic growth with the emergence of huge middle classes in the developing world, then, O’Byrne argued, industrial demand will drive the price of silver up, since silver is in cell phones, computers, and countless other products. Silver is also unlike gold in that once it is used, it is consumed and lost to the market.
As central banks print more money, demand for silver on the investment side also should increase, O’Byrne argued. “That will make silver go parabolic.” He argued that silver should go up one, two or three times “just on industrial demand alone.” O’Byrne argued that the silver market is distorted by “interventions into bond and foreign exchange markets.” Last year, demand for silver was up 13% yet prices fell. O’Byrne called this “Very, very unusual.” He said the paper market is ultimately dictating the price. Demand is for physical silver, not for paper. The total supply of physical silver in the world above ground is 1.39 billion ounces or about $30 billion, but the total value of the futures market is $5 trillion.
O’Byrne argues that the paper market has been manipulated. Barclay’s was fined 26 million pounds for manipulating the market andthe Germans are also investigating charges of manipulation. O’Byrne said, “To me, it’s almost certain that there is manipulation going on.” O’Byrne believes that supply and demand will force the price at some point to a more realistic level and the more the price is artificially suppressed, the bigger the bounce back in the future. What type of silver should you own? O’Byrne said physical silver. He expects “Huge returns, but there’s no guarantee of that. It may go to the moon, it may not.” He argues you should buy silver as a diversification.
He cautioned that you want to own the real asset, such as silver eagles, kilo bars or smaller bars, which are easier to sell. He recommended storing silver in safe vaults and safe jurisdictions, such as Hong Kong or Zurich. He also warned to make sure the silver is allocated and segregated, so you know what you own and can take delivery whenever you want.
In 2000, O’Byrne said, his company predicted silver at $150 an ounce in a 15 to 20year bull market. He said we are in year 13 of that bull market, so by 2020, “sooner rather than later,” he expects it to hit $150. Silver is up 10.3% this year, and he sees “no reason that [the climb will] not continue. But with manipulation,” it could go down. To invest in silver, he recommended thinking in terms of at least 3 to 5, 10, or even 20 years out.
