Silver's fundamentals are stronger than gold – Randy Smallwood
The gold/silver ratio continues to hover near its lowest level in a month as silver continues to play catchup within the precious metals markets.
On the sidelines of the Mines and Money Online Connect virtual mining conference, Randy Smallwood, president and CEO of Wheaton Precious Metals, said that now is silver's time to shine. It is only a matter of time before the metal follows in gold's footsteps and hit record highs above $50 an ounce, he added.
"There's just all sorts of benefits to silver," Smallwood said. "We've been saying for a long time, the fundamentals are much stronger, but silver always lags gold when gold starts moving. In the last two months, we've really seen silver totally outperform and claw its way back up. Now, we're not at record highs yet, but with the fundamentals behind silver… I'm confident that we will see record highs in silver over the near term."
Smallwood's comments come as silver prices push to a nearly two-week high. September silver futures last traded at 28.385 an ounce, up more than 2% on the day. Meanwhile, the gold/silver ratio is currently trading at 70, down significantly from March’s all-time high around 125.
Some analysts have said that silver prices have struggled in gold's shadow because of weak industrial demand due to the devastating impact of the COVID-19 pandemic; however, Smallwood said that along with being a monetary metal, silver's industrial demand is what makes it more compelling than gold.
He added that silver's industrial demand is only going to continue to grow. In a world that looks to be more energy-efficient, Smallwood noted that silver is the best conductor in the world, "better than gold, better than copper."
"Everything here feels like we're just building up from our foundations for our continued strong move up," he said.
Smallwood said that with gold and silver just starting what is expected to be a long-term bull market, he continues to see strong growth for streaming and royalty companies.
However, he also noted that higher gold and silver prices make deals a little more expensive and harder to come by.
"There are times to make deals and there's times not to," he said. "What we look for, of course, are opportunities where we can deliver value back to our shareholders," he said. "There's still a lot more development that needs to be funded in this industry. We haven't seen a lot of redevelopment invested in, and so I think that demand is going to be there and be strong."
Smallwood said that an area of growth he sees in the future is working with base metal producers, getting a streaming deal for precious metals produced as a bi-product.
"When they see the record high prices on the precious metal side, especially the gold space…there's a lot of consideration about whether they should crystallize some of that non-core byproduct value," he said. "So, we are seeing still some good, strong interest on the streaming side."
By Neils Christensen
For Kitco News
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