VIDEO - David H. Smith: Silver Stuck Below US$30, Look to Labor Day for a Change

The US$30 per ounce level continues to be a point of resistance for silver, but according to David H. Smith, that could change as the year continues. 

Smith, who is senior analyst at the Morgan Report, said he’s looking toward Labor Day for a change.

“It’s been almost a year, it’s been longer than people expected. (US$30 has) proven to be more of a difficult area to break through than people imagined,” he told the Investing News Network.

“But I think that area is getting long in the tooth, and I wouldn’t expect it to hold up too much longer as we head into the fall, and after Labor Day for sure.”

In terms of how high the white metal could go this year, Smith said it’s difficult to say, although many people he respects think it could rise above US$50 in 2021.

Smith also spoke about supply and demand dynamics for silver, sharing interesting observations about supply in particular. About 70 percent of silver is produced as a by-product of other metals, and he suggested that this by-product supply may not be as secure as some market participants believe.

“The assumption is there’ll be new copper deposits coming on board, and when that happens there’ll be a lot of new silver since so much of it is a by-product of copper production,” said Smith.

“But my premise is that there won’t be that many deposits coming on because they take a long time to get to the production stage. If you discover a copper deposit — and it needs to be a large one to pay off — it can take 15 to 20 years or more to get that from the prefeasibility to getting actually the $2 billion to $3 billion necessary to get up into a productive mode.”

That of course doesn’t bode well for silver supply, but does look promising for the price.

For investors, the question is whether to buy now or wait for a potential pullback before a potential silver takeoff. For Smith, the answer is clear: “I think it is a good level (right now). It’s not the best level you could have had in the last year for sure, but the thing is the premiums can go through the roof when the supply gets tight, which could happen very quickly.”

Watch the interview above for more from Smith on silver.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.