US Military Could Boost Silver Demand
Summary
- A majority of SLW’s production will come from silver despite the company increasing its focus on gold, indicating that improving silver dynamics will play a key role in its turnaround.
- The silver market is expected to clock a demand-supply deficit this year due to low mine output and scrap supplies, indicating that prices will improve and positively impact SLW.
- Silver demand will increase on the back of higher industrial demand and usage in solar panels, which will increase SLW’s addressable market.
- SLW has an impressive valuation which indicates that its bottom line is set for growth, and the company is also cutting its debt, which will lead to lower interest expenses.
In a recent article, I had explained why Silver Wheaton (NYSE:SLW) will benefit from its increasing exposure to gold. In that article, I had made it clear that rising demand for gold and a low interest rate environment will act as catalysts for gold pricing, and help Wheaton arrest the decline in its financial performance.
But, at the same time, we should not forget that silver will still account for more than half of Wheaton’s production going forward as evident from the following graphic:
Hence, Wheaton investors also need to pay attention to the silver market’s prospects, as it will play a crucial role in determining the company’s overall performance going forward.
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