Why traders are looking at Silver as the new Gold

Why traders are looking at Silver as the new Gold

hello welcome to ig’s trading the
markets uh clients here have a huge uh
number of positions open uh on the gold
markets and also across gold miners but
really uh there’s been a surging
interest in silver recently also um
described as perhaps a new gold well
with me right now to talk about all this
and more is uh Paul Cronin the head of
Adriatic Metals um just a really quick
uh uh introduction to our clients just
give us a sense of what you do before we
talk about
silver oh look tic medals is a is a
mining company um we’re operating a mine
uh in Bosnia that we’ve recently just
constructed um it’s about 55 kilometers
north of the capital
sevo um and it is a mine that is
predominantly silver and zinc it’s its
uh two main
Commodities um we’ve started working
here I mean Adriatic metals is a British
company listed on the London Stock
Exchange we started working here 7 years
ago um and we’ve taken the the uh
discovery of this asset into production
very recently uh so the the company’s
sort of starting to change quite quickly
now Paul you’ve got unique insight into
you know the outlook for this Market how
much growth is there in uh Sila on the
demand side for say the next 5 to 10
years but the silver demand really
varies uh depending on how uh investors
want to uh preserve the value um of
their currency so you know about
45% uh of silver demand is based on just
its precious metal value where we are
seeing a lot of growth um has been in
its industrial uses and its industrial
uses increased about 20% last year um
and that’s largely being driven uh by
photoal Tes but also because silver is
such a conductive metal with uh very low
resistivity uh we’re seeing New Uses
coming into semiconductors uh into High
Velocity electric vehicle charging um
and now there’s look there’s potential
to deploy silver in other parts of our
power grid um as we’re seeing uh an
increased amount of electricity demand
globally um primarily driven through
data centers and artificial intelligence
and as we’ve seen there’s been a huge
huge um uh Renaissance or or rather um
well those who are keen on AI say it’s
Renaissance those who are critics say
that you know it’s a it’s a bubble but
either way we’ve had a huge amount of
interest in Ai and that’s really carried
the markets in the last 18 months
especially on Wall Street also at the
same time you know the uh electric car
Revolution continues not at uh you know
the pace that we’ve seen the last few
years but it continues uh the iea
recently saying more than one in five
cars sold globally is set to be Electric
in uh
2024 are these all just positives for
silver oh look I think so but if you
look at Silver supply and demand
fundamentals over the last sort of 13
years um from 2010 to 2020 the market
was relatively balanced um small
surpluses small deficits year on year
come 2021 there’s been a huge deficit
2022 and 2023 and if you look at those
three years combined there’s over 500
million ounces of silver in deficit
that’s been drawn out of out of stocks
now that’s almost half of one year’s
total demand which is huge I think when
you then uh take into consideration that
we are seeing declining inventores we’re
also seeing declining reserves um in
available silver Minds um and we’re
seeing a massive increase in cost so C1
cash costs for silver production have
increased over 60% in the last 10 years
um all of this very bodess very well for
silver prices if we look at the
long-term gold silver ratio um uh so
over the last 10 years it’s been about
80 to1 uh so 80 you know gold is 80
times the value of silver um I think
that’s going to change I think we’re
going to see that revert back to where
it was in the 1960s and 70s where it was
close to the 30s one um that means
silver prices are likely to go up quite
substantially now of course I’m talking
my own book um but I look at the
fundamentals and I don’t see any other
um any other route for for silver um
prices moving forward uh at the end of
the day you know only about 25% of
Supply comes from dedicated Silver Mines
the rest comes from copper and zinc
largely um we’ve seen zinc prices very
depressed over the last couple of years
and I think that has had a fundamental
impact on Silver production um so
ironically we’re not likely to see an
increase in silver production to meet
that increase in demand um until we
actually see zinc and copper prices
increase and none of that burs well for
2025
inflation um what’s also interesting is
back in uh February um Adriatic produced
I believe the first concentrate at the
varish silver project um and at that
time I believe you said you were aiming
for
65,000 metric tons a month by Q4 how far
away are you from this
projection so 65,000 tons of of O
development uh per month will be
achieved in Q4 at the moment we’re still
ramping up as we as we cut more
development drives into our into our
production stopes um you know 65,000
tons of or we should be producing around
about 8,000 tons a month of zinc
concentrate and around 5 a half thousand
tons a month of of silver lead
concentrate and all of those
concentrates will be sold either in
Europe or in China um so it it does take
us a little bit of time to ramp up to
full production but we’re confident in
getting there by the end of the year as
we’ve guided the market at the same time
we’re seeing you know still weakness out
there that Great China reopening never
quite materialized um the US seems to be
you know coming along quite uh nicely
with quite robust data coming out of the
but uh we do have still geopolitics uh
and tensions uh between the west and
Russia and China do you think that um
we’ll see more diversification and
perhaps more uh Metals production needed
in Europe as a result yeah look I think
we saw the inflation reduction act in us
have a profound impact uh on metal
production not just in the US but also
in in places like Australia uh Canada
and South America the European critical
minerals act which was adopted uh last
year um is intended to increase raw
material supply in Europe for use in
European high-end manufacturing now
Adriatic Metals was set up on the basis
that we felt that that was going to
happen eventually uh that Europe you
know Supply Chains would become fragile
Europe would start to look at how it’s
going to secure what it needs um for its
high-end industrial companies um you
know our timing was quite good on that
um we’re bringing the the project into
production at a time when Europe needs
it most and because we are close to our
supply base our carbon intensity is far
lower than a lot of our
competitors and speaking of carbon
intensity I mean mining as we know it
I’ve been to you know uh mines and seen
them from AAR uh and seeing the impact
um and in a time when ESG is sort of you
know mentioned everywhere how are you
lowering your impact on the
environment look we don’t have a big
impact on the environment at all um you
know certainly when you construct
anything whether it’s a road a new
building um there is some vegetation
that’s been removed and we’ve removed
about 32
hectares uh of IND of commercial Forest
um but we’ve also planted more more than
four times that number of new trees um
so when we look at our impact we look at
both the negative impact and a positive
impact um I think from our perspective
you know if European smelters in Benelux
Norway Sweden are requiring a zinc
concentrate uh to to create you know
galvanizing agents for steeling they
have a choice they can buy it from a
mine that’s close by that has a lower
carbon intensity in terms of getting the
product where it needs to be or they can
look at buying it from someone like
South America Australia or China so I
think overall the environmental impact
that Adriatic has is actually negligible
if not a positive on European Supply
chains and for those investors watching
this um looking for exposure to Silver
um which route would you would you
suggest if they’re new to to uh
investing in
silver uh look you can you can buy
silver relatively easily um you know you
can call up the L bullan Market
Association and and buy bars of silver
you can buy comx future
um if you’re looking for a leveraged
exposure to Silver um clearly that’s
going to come through the silver miners
um and companies like ours that are not
fully valued because we’ve only just
entered uh into production I think offer
a very good uh a very good choice for
investors to get a leveraged exposure to
Silver um or be you know at a slightly
higher risk than buying it in a vault
and leing it sit there thanks very much
uh Paul Cronin the head of AG itic
Metals talking to ig this is ig’s
trading the markets
[Music]

As gold prices hit record highs, many are looking to silver as an alternative financial asset. Adriatic Metals CEO Paul Cronin discusses the demand outlook for the metal with IG’s Angeline Ong. Adriatic Metals is a precious and base metals explorer and developer with licences in Bosnia & Herzegovina and Serbia.

#Gold #Silver #Trading

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