Nearly one year ago, the gold/silver ratio rose to a historic high above 124 points. Since then, the silver market has significantly decoupled from gold. The ratio has fallen back to historic norms around 65 points, a decline of nearly 50% from the all-time highs.
According to the CEO of the largest silver producer in the U.S., silver’s move is just starting. Friday’s Wallace Roundtable guest was Phillip Baker, CEO of Hecla Mining and he described silver as the new techno metal as its industrial demand continues to grow.
“Silver is in a unique position that it’s never been in before. And not the pandemic and it’s not even the fiscal and monetary stimulus that we’ve had,” he said.
Baker said that the world’s commitment to decarbonizing the global economy by developing clean, renewable energy to producing more electric vehicles, will be an essential pillar of demand for silver. He added that new industrial fabrication could boost silver demand to 600 million ounces in the next 20 years.
“[Silver] really is a unique metal. It has characteristics that no other metal has,” he said.
Not only is silver demand expected to continue to grow, but Baker said that supply is also reaching its limit as there has not been any significant new mine development in years. He added that if this trend continues, supply will struggle to keep up with demand.
However, Baker added that Hecla is in a good position to remain a leader in silver production. Baker noted that Hecla producers about a third of all the silver in the U.S.
Looking at the company’s growth, Baker said that its Lucky Friday Mine in Idaho still has plenty of future growth. Even after 75 years in operation, the company is looking at ways to improve production. Baker said that the mine currently produces 2 million ounces of silver and the company expects that to increase it to 5 million ounces in two years.
Baker also noted that aside from Lucky Friday, the company has plenty of growth potential in its pipeline.
“We have, over the next 10 years, maybe up to seven properties that could go into production,” he said.
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