Will ASX silver shares ride the commodity super cycle to new highs?

Analysts are increasingly forecasting a new commodity super cycle. Will ASX silver shares ride that cycle to new share price highs?
The post Will ASX silver shares ride the commodity super cycle to new highs? appeared first on The Motley Fool Australia. –

asx silver shares represented by silver bull statue next to silver bear statue

You may have heard of the commodity super cycle potentially taking shape on our doorstep.

These types of super cycles don’t occur frequently. In fact, over the past century there have been only 5. The last one ground to an end as global liquidity dried up amid the GFC.

Now, with commodities having largely been in the doldrums for the past decade, analysts are increasingly forecasting that a new commodity super cycle is taking shape. Or may already be underway.

Chris Watling is the chief market strategist and founder of Longview Economics. According to Watling (quoted by the Australian Financial Review):

Commodity super cycles tend to occur after periods of loose central bank policy and run for about a decade. Commodities peaked relative to equities a decade ago and now they are very cheap and below their levels seen in 1969 and 1998 before prior super cycles began.

Will ASX silver shares get swept up in the commodity super cycle?

In case you haven’t noticed, silver prices have been going ballistic lately.

How ballistic?

On 1 February silver was trading at for US$29.15 (A$37.37) per troy ounce. That’s right on 5-year highs. And it’s up an impressive 143% from the US$11.98 per ounce it was worth on 18 March last year.

Yes, the price of silver has retraced a touch since the first of this month, currently at US$27.61 per ounce. But that’s still within touching distance of multi-year highs.

And a large part of that recent price retrace is likely due to a retreat of long positions from the Reddit army. On 1 February rumours were still circulating on Reddit’s WallStreetBets that silver could hit US$1,000 per ounce following the retail hordes efforts at a short squeeze on the precious metal.

While that didn’t eventuate, if the commodity super cycle takes shape in this era of ultra-loose central bank monetary policy, ASX silver shares could be well positioned to benefit.

Two leading ASX silver shares

There are a number of quality silver shares trading on the ASX.

Two of the larger silver miners and producers are Silver Mines Limited (ASX: SVL) and South32 Ltd (ASX: S32).

South32 has a market cap of $12.4 billion and pays a dividend yield of 1.2%, fully franked. Over the past 12 months, the South32 share price is flat. Year-to-date the share price is up 4%.

Silver Mines has a market cap of $286 million and does not pay a dividend at this time. Over the past 12 months, the Silver Mines share price is up 170%. In 2021, its shares are up 4%.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Will ASX silver shares ride the commodity super cycle to new highs? appeared first on The Motley Fool Australia.

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