Peter Krauth: Silver in New Territory, Worst-case Scenario is US$26

He explained that the gold price move that started about three months ago lit a fire under silver, which tends to lag behind its yellow counterpart before outperforming. That scenario is currently playing out.

Aside from that, Krauth believes futures exchanges and exchange-traded funds are being drained of silver.

‘I think that the market’s come to grips with the fact that that’s where the silver is coming from — that is what has allowed these large consumers of silver to tap silver supply without pushing the silver price up,’ he said.

Krauth continued, ‘We’re potentially somewhere around 12 to 24 months of this continuing before we’re going to run out of these secondary supplies. And then all bets are off — someone’s going to try to get silver (and) won’t be able to … That combined with a considerably higher gold price is helping to really, really move silver these days.’

The interview took place before silver’s fall below US$30 on Monday (June 4), but Krauth explained why he wouldn’t be concerned to see that happen. In his view, the metal could test US$28 or even US$26, but is putting in a floor at US$30.

‘I think we could see a little bit more weakness potentially in the next weeks, perhaps the next month or two even as we go through the summer — I’m not saying this will happen, I’m saying it could happen,’ he noted during the conversation.

‘Maybe we’ll see a test of US$28, maybe even sort of a washout test as low as US$26. But I don’t see much weaker than that … (and) if we do drop below, ultimately we will regain US$30 and that will become a new floor.’

Silver was back above US$30 by Wednesday (June 5), closing the day at US$30.05.

Watch the interview above for more from Krauth on silver supply, demand and stocks.

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