The media got silver wrong, according to John Feeney, the manager of Guardian Vaults, who has said the real news about silver is the physical squeeze, and that this squeeze is not over yet.
“Much of the media ran the silver story, saying it was a short squeeze. But the real story is the physical squeeze happening in the market, where it is very difficult to get stock,” Feeney said to reporters this Monday.
Even after silver gave up its eight-year highs, robust demand continued.
“We see strong demand for silver even after the pullback. We sold our silver last week pretty fast, and we are attempting to re-stock. Even the world famous Perth Mint was forced to stop taking orders on silver bars temporarily. We see a physical squeeze in silver right now.”
Usually, when a large increase in demand for physical metals happens, bullion sellers run out pretty fast. “We are still witnessing that,” Feeney stated.
But, does this high demand mean higher prices, and if so, how soon? Feeney stressed that this is a long-term play aiming at a 12-24 months period.
Sometimes this turns into a self-perpetuating cycle, where news about physical shortages in any commodity will attract speculators.
But will silver reach $50?
Silver has been mostly under-invested until 2020, when it began its rally and even outperformed gold.
“Silver had poor gains during the few years before 2020. There was little investment in the silver sector. Prices were pretty depressed,” Feeney said. “The move in 2020 was just the start of the bull market.”
Feeney claimed the metal could increase into the $30s by the end of 2021. He also stressed that once Silver breaks higher than $30 per ounce, new buyers will come in and begin to push that figure even higher.
He did not rule out the $50 target but stressed that it might take a few years to reach that number on a maintainable basis.
“With the amount of money being printed combined with how under-invested and owned silver is. Plus, industrial demand and investor demand, we might see that $50 mark eventually,” he said.
At the time of this article, the gold-silver ratio was sitting at 67.5, and the March Comex silver was at $27.35, down by 0.82% on the day.