The Bank of Montreal (BMO) has recently come out in support of the white precious metal, silver. BMO is reportedly the second Canadian Bank supporting silver.
BMO has stated that the metal has more potential than gold in the long-term and the analysts also stated that they expect silver prices to rise to around $20 an ounce, and expect gold to remain mired in its current range of $1,200 an ounce.
BMO’s target in the context of long-term silver reportedly represents a gain of over 17% from current prices. And, December silver futures last traded at $16.995 an ounce, which was down more than 2% on the day. At around the same time, December gold futures were down 1.42% on the day and had last traded at $1,278.10 an ounce.
In the next year, the analysts have stated that their top silver equity pick is Fortuna Silver Mines
(NYSE: FSM, TSX: FVI). They said that Fortuna checked all of the boxes given a strong balance sheet, its attractive valuation, and the Lindero development project, which was set to deliver best-in-class growth.
They also reiterated that the investment demand for silver remained strong and trended upwards following the global financial crisis. And, the strong investment demand combined with expectations of renewed industrial activity demand supported their long-term $20 per ounce.
Meanwhile, in 2018, BMO economists expected the Federal Reserve to raise interest rates to 2%. They said that the slow pace of rate hikes combined with heightened geopolitical uncertainty in the world would continue to support silver investment flows.
Currently, BMO sees six silver companies having the potential to outperform within the sector,
namely Fortuna, MAG Silver (AMEX: MAG, TSX: MAG) SSR Mining (NASDAQ: SSRM, TSX: SSRM), Bear Creek Mining (TSX: BCM) Pan American Silver (NASDAQ: PAAS, TSX: PAAS) and Coeur (NYSE: CDE).