Silver may be on the verge of joining gold as a central bank reserve asset, according to Crescat Capital Partner and Macro Strategist Tavi Costa.
In an interview with Michelle Makori, President & Editor-in-Chief of Miles Franklin Media, Costa said a historic shift is underway in how sovereigns approach precious metals.
“We should call this what it is, it’s a gold rush,” Costa said, describing this year’s gold rally with prices up more than 45% year-to-date, on track for their best price performance since 1979. “And if we’re seeing that, eventually we’re going to see a silver rush in my view.”
Costa noted that silver’s role extends far beyond its industrial uses in solar panels and technology. “Wait until you see the monetary aspect to start really being priced in the metal. That’s not a $45 an ounce asset. It’s way higher than that,” he said.
For Costa’s price projections for gold and silver for the next 6-12 months, watch the full episode of ‘The Real Story’ above.
The strategist argued that silver remains historically undervalued relative to gold, with the gold-to-silver ratio near 80. “The fact that we’re seeing silver approaching new highs with the gold to silver ratio still 80 is one of the most bullish things I’ve seen,” Costa said.
He called silver “one of the most attractive investments I’ve seen in my career,” pointing to mining companies as a way to gain leverage. “The fact that you can get leveraged to silver by owning a mining company that still produces silver sub-$20 an ounce is just insane to me,” Costa said.
For Costa’s mining picks, watch the full episode of ‘The Real Story’ above.
Costa added that many investors underestimate how profitable miners are at today’s prices. “The realized earnings of these companies are coming in so high that they’re cheap historically today. And I don’t think that’s going to change any time soon,” he said. Still, he cautioned that energy costs remain the key risk for producers.
Looking ahead, Costa expects silver to break out aggressively. “It would shock me if we’re not at all-time highs in six to 12 months in silver,” he said. “It would shock me if we don’t go to crazy levels in the next 12 months, meaning substantially higher than the prior peak levels.”
