October 2020 - Week 4 Edition
Big Banks Say that Silver Could Double to $50 with a Biden Victory
Giant banks like Bank of America and Goldman Sachs say that silver could double to $50 per ounce if Joe Biden wins next week’s presidential election, primarily due to enactments of some elements of the New Green Deal, which could double silver’s industrial demand for solar panels and other applications.
“Investors help, but industrial demand ultimately moves the needle” for silver prices, wrote a team of Bank of America strategists led by Michael Widmer last August. Annual silver demand, now about 2,285 metric tons, could increase by 87% to 4,272 tons over the next 15 years based on de-carbonization of the U.S. sector alone, according to the BofA strategists, who believe this new demand could “push silver into a sustained deficit,” which last occurred from 2006 to 2011, pushing silver up to $48.58 in April 2011.
Bank of America strategists think Biden’s “green stimulus” could push silver to $35 an ounce in 2021 and then take off on its third run up to the $50 region (after 1980 and 2011) within the “medium term.” This would represent a remarkable percentage gain from the latest near-term price floor of $10.80 last March.
Goldman Sachs agreed with this prognosis on October 12, when Goldman analyst Mikhail Sprogis said silver will be an “obvious beneficiary” of a Biden victory due to his energy bias tilting toward renewable energy, and solar in particular. Solar investment accounts for 18% of silver industrial demand and 10% of silver’s total demand, he added. Goldman Sachs declared that they had just bought silver at $24 per ounce due to “a few potential upward solar surprises in the coming months.” Those expected “upward solar surprises” would include both the U.S. and China stepping up plans for more solar installations.
Goldman’s best-case scenario is that global solar installations would increase by 50% between 2019 and 2023, but they could grow even faster under Democratic presidential nominee Joe Biden’s plan to install 500 million solar panels in the U.S. in the next five years. Meanwhile, China could boost its installations by 40% in its new 5-year plan. Sprogis also said that silver is a buy due to its precious metal role.
Trump could still win, but the pollsters and pundits tell us we should prepare for a Biden victory. If so, we should prepare for a new reality by investing in the three metals of freedom, perhaps in this order – silver, gold and lead, since sales of guns and ammunition are also booming in advance of a probable Biden win.
Gold Remains Above $1,900
Gold remained firmly above $1,900, seemingly awaiting the results of next week’s elections. For the time being, gold is fighting a stronger dollar, which is reacting to Europe’s rise in coronavirus cases and a resulting lockdown, as well as a breakdown in talks over the next stimulus package of about $2 trillion in new fiat currency: Creating trillions of new dollars is generally bullish for gold, which can’t be “printed.” Silver also maintained its price level above $24, and silver could get a big boost with a Biden victory.
Countdown to the “Roaring 20s” of New Coin Designs
After next Tuesday’s election, coin investors can turn their attention to 2021 in more ways than one. Then it will be only two months until the start of a series of new coin designs in the 2020s, starting in 2021.
First, we are likely to see commemorative versions of the Morgan and Peace dollars in 2021 to mark the centennial year of the final Morgan dollar and first Peace dollar in 1921. In mid-1921, we will also see a change in the reverse design of the gold and silver American Eagles. These will engender new interest in both the old and new designs and generate new interest in coin collection, resulting in numerous new ads posted in various media, which generates new customers. Experience has shown us over the years that about one out of six of these many new buyers of bullion coins later turns into buyers of numismatic coins, strengthening the market for years.
After 2021, we will see another series of circulating coins to be implemented between 2022 and 2030:
In addition, we will likely see new alloys used in forthcoming coin mintages. This will also create new interest in the collector and investor communities, since first-year issues are especially popular, and their mintage totals are sometimes limited. The primary reason for these new alloys is to reduce production costs and limit future shortages. Coins under consideration for change are the copper-plated zinc Lincoln cent, copper-nickel Jefferson 5-cent coin, copper-nickel clad Roosevelt dime and copper-nickel clad America the Beautiful quarters. The cost savings will be greatest for the lower-denomination coins.
The Mint has come up with potential compositional alternatives that offer cost savings for most small coins, except the cent. (None of the currently known possibilities would bring the cent’s cost below face value.) Possibilities determined by the Mint for the 5-cent, dime and quarter dollar denominations would incorporate manganese with some copper and nickel in the alloy. Other alternative alloys include steel.
(Of course, I have long argued we should eliminate the Penny coins, but that is another story for another day.)
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