Top Silver Stock Pick For 2021

We are expecting a breakout year for silver in 2021. In fact, we think the silver price will easily make a new high above $50 with the potential to challenge $100 within the next year or two.

While the fundamental focus for silver is usually the investment demand, jewelry demand, and its use case as an inflation-hedge, we see the industrial demand component being a key driver of the higher price over the next few years. Demand growth in EV batteries and clean energy applications is expected to tick higher, partially fueled by a new US administration that is friendlier toward these sectors and likely to spend more aggressively on infrastructure projects and clean energy job creation.

Not only is the industrial demand case strong, but the higher levels of stimulus, money creation, and financing big government spending through debt, is likely to increase downward pressure on the US dollar. We have already seen unprecedented levels of stimulus to combat the pandemic, but another $2 trillion is likely on the way. And it is important to remember that the government does not actually have this money to spend. They are creating new debt to do this, piling it on top of already record levels of debt and pushing the burden to future generations.

This is all incredibly bullish for silver. It is unfortunate for the country, but we have to make the best of the situation by protecting our hard-earned wealth and purchasing power.

Adding to the bullish case is the fact that the total silver supply fell 4% in 2020. Total demand dipped by a lesser amount (3%), but we have seen record levels of inflows to silver funds and record physical demand over the past week, driven partly by a movement to create a silver short squeeze. Most bullion dealers are completely out of stock for silver bars/coins and those that have inventory are selling for over $40/ounce compared to the spot price of $27. The divergence has never been so severe, yet it is hard to arbitrage as they set the rules and force cash settlement.

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