Silver rose strongly in the first half of 2016, but has since slipped from more than $20 an ounce to around $17. But next year should be a different story, says Rhiannon Hoyle in Barron's. Mined supply declined this year from 2015's record, and according to HSBC's James Steel, it could keep sliding. Silver is mined as a byproduct of other metals, and production from gold and lead mines has been falling. On the demand front, silver looks set to benefit from a pick-up in industrial demand, which accounts for half of overall demand. Silver is used in sectors ranging from automobiles to medicine. It is a key ingredient in solar panels, where demand is expected to climb by 11%.
The improved economic outlook stems partly from Donald Trump's plans to reflate growth, and a key element of this reflation, as we have often pointed out, is likely to be inflation. "Silver is one of the best things to have if you expect inflation in the long term," says Moe Zulfiqar on LombardiLetter.com. Over the past 46 years, US inflation has risen by 506%, while silver has done twice as well.
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