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Silver has seen significant momentum in the last two months as it is now outperforming gold. One mining executive said that all-time highs are not out of reach for the precious metal with this strong tailwind.
In an interview with Kitco News on the sideline of the Mines and Money Online Connect global virtual mining conference, Jim McDonald, CEO of Kootenay Silver, said that unprecedented loose monetary policy around the world would continue to drive precious metals higher. He added that silver's all-time high around $50 isn't even the full target.
"I don't think [$50 silver] out of reach at all. I firmly believe it's going to happen. I don't know what the timing is going to be," he said. "And I think it's going to overshoot that old price and maybe buy quite a bit. We've been waiting a long time for it to break that major psychological $20 barrier."
McDonald said that he could see the gold/silver ratio falling to 30 points in an over-corrective move after hitting an all-time high around 125 in March.
"That kind of ratio and the silver price would be close to a hundred," he said.
Not only is the silver market expected to rally higher, but McDonald said that he expects market conditions to sustain higher prices.
Although weak industrial demand was weighing on silver at the start of the year, causing the precious metal to underperform gold, McDonald said that those factors are now being outweighed by the massive stimulus measures undertaken to support the global economy, devastated by the COVID-19 pandemic.
"We're getting to see a silver start to trade, like a currency as well. That will be the overriding factor here in driving the silver price, not the economy," he said.
McDonald added that the rally in gold and silver has created a transformational shift in the marketplace. He explained that only a few years ago, Kootenay Silver had to beg for every investment dollar it could get.
"Fast forward to today. We announced our financing in the morning and the book was closed about an hour later on $5 million and we up-sized it to seven. So it's a very, very different environment," he said.
Kootenay Silver has one of the biggest portfolios of silver assets in Mexico. McDonald said that their focus now with their new capital is to continue to de-risk their projects, including their cornerstone property Columba silver project.
By Neils Christensen
For Kitco News
