PM's may be going lower!

[ozcopper]

The Worst Case Scenario - Chris Vermeulen

Summary: Where are the markets heading? Chris Vermeulen comes on the show to talk stock markets, precious metals, oil, and the other industries we?ve kept our eye on. The predominant theme right now is panic selling; people are eager to get out of the stock market, but with this selling comes strong rallies. Gold is hanging on by a thread, and needs to show more consistency in order for it to look promising. We are also seeing the energy sector struggle; Chris points out that all assets follow the broad market, and advises not to get overly confident in this circumstance. Ultimately, capital preservation is the most important thing right now?with an emphasis on low risk investments.

Highlights: -We?ve were seeing a rally over the last few weeks, but now we?re experiencing panic selling; people want to just get out of the markets -We?re in a strong down-trend. Bonds and equities are selling out; however, this could give us a bottom for a tradable bounce -With panic selling comes strong rallies -Downward price action will bring the stock market down into a major support zone. From here we could see a 5-10% bounce in the market -Gold is hanging onto a thread; if it breaks, it could go back to 1300 -There?s going to be a lot of volatility/pain for those who don?t have a plan to get out of the precious metals -The market is trying to suck people in to get traders excited -It needs to hold 21 for more than a day to actually be interesting -The energy sector is struggling

Useful Links: Financial Survival Network The Technical Traders

[youtube]https://www.youtube.com/watch?v=P2rhSR2ZnTA&ab_channel=KerryLutz%27sFinancialSurvivalNetwork[/youtube]

 

[jason1]

Its definately not un-usual for PM's to get smashed during ecconomic downturns.
But Its typical for them to bounce back hard and high straight from those crushing lows.

his assessment is likely correct and its likely good to hang onto your money and get ready for a Purchasing opportunity that comes along with these PM falls.

 

[STKR]

That was a good conversation to listen to. This fella really knows his stuff when it comes to trading but he appears to only look at the markets through that lense. It's kinda odd that there's almost no commentary from anyone on the scene who understands the paper and physical markets. David Morgan is probably the closest we get to offering a comprehensive overview.

I reckon we could see premiums on silver increase again if we dropped to low $20 AUD silver. I'd be a buyer at those prices and I know many others would jump on that opportunity, too.

 

[jason1]

That was a good conversation to listen to. This fella really knows his stuff when it comes to trading but he appears to only look at the markets through that lense. It's kinda odd that there's almost no commentary from anyone on the scene who understands the paper and physical markets. David Morgan is probably the closest we get to offering a comprehensive overview.

I reckon we could see premiums on silver increase again if we dropped to low $20 AUD silver. I'd be a buyer at those prices and I know many others would jump on that opportunity, too.

see heres the problem when people dismiss the spot price, Only a fraction of say silver goes into the retail bullion market, the rest goes into industry and industry does not pay the premuims we retail investors pay for silver, while spot maybe pushed down lower, heres the thing you still need to take into account thats the industry standard that value is based off. High Premiums are a retail thing.
the Bullion market is actually fairly small part of PM industry, basing an investment off premiums isnt really that useful. a Solar company who uses silver in their panels or circuit board company that uses gold in their boards isnt buying gold at high premiums, they buy very close to spot. I think we have this idea that all gold and silver is turned into over priced roo's and ten ounce bars, it isnt, a majority of it is sold to industry if the demand of it was as high as it many like to say it is, then the spot price would be much higher from industry alone.
the demand for retail bullion is higher, but its not high enough to change markets spot price, and they only make so much retail product each year, but they refine way way way way way more product for the industrial market than they turn into roos. so the only reason retail premiums are high is because of the limited amount they turn into coins. again if the industrial use was above supply, no amount of manipulation would hold back spot price, we dont see Industry desperate that they can no longer buy their PM from the refineries and instead resorting to buying retail priced bullion. if that started happening then we know there is a problem but that is not happening.
Spot is manipulated to a certain point But not to the point it matches what we pay for bullion. people keep over looking the difference between retail bullion and actual wholesale bullion. retail bullion is a very small market that is limited by how much a mint or refiner wishes to put on the market. Its not hard to figure out whats going on here and premiums are so expensive. the produce less retail product when there is demand  for it and spot is low, they make more money for less effort, especially when there is labor shortages.

 

[alor]

oil cannot be struggling
Opec+ will be cutting 1Mbpd 5th Oct 22, last time they cut 100k, price went up $3
the price should go back up to $90 after that cut.

 

[STKR]

That was a good conversation to listen to. This fella really knows his stuff when it comes to trading but he appears to only look at the markets through that lense. It's kinda odd that there's almost no commentary from anyone on the scene who understands the paper and physical markets. David Morgan is probably the closest we get to offering a comprehensive overview.

I reckon we could see premiums on silver increase again if we dropped to low $20 AUD silver. I'd be a buyer at those prices and I know many others would jump on that opportunity, too.

see heres the problem when people dismiss the spot price, Only a fraction of say silver goes into the retail bullion market, the rest goes into industry and industry does not pay the premuims we retail investors pay for silver, while spot maybe pushed down lower, heres the thing you still need to take into account thats the industry standard that value is based off. High Premiums are a retail thing.
the Bullion market is actually fairly small part of PM industry, basing an investment off premiums isnt really that useful. a Solar company who uses silver in their panels or circuit board company that uses gold in their boards isnt buying gold at high premiums, they buy very close to spot. I think we have this idea that all gold and silver is turned into over priced roo's and ten ounce bars, it isnt, a majority of it is sold to industry if the demand of it was as high as it many like to say it is, then the spot price would be much higher from industry alone.
the demand for retail bullion is higher, but its not high enough to change markets spot price, and they only make so much retail product each year, but they refine way way way way way more product for the industrial market than they turn into roos. so the only reason retail premiums are high is because of the limited amount they turn into coins. again if the industrial use was above supply, no amount of manipulation would hold back spot price.

Of course. Buying physical bullion means you're essentially entering two markets.

It doesn't matter if industrial use is above supply. Overall demand has been above supply for many years over the past decade. It's been slowly chipping away at the silver reserves held above ground and we're still seeing silver priced well below its ATH. For as long as there are above-ground stockpiles and they're used to offset increased demand, the Markets will continue to ride the carousel as if nothing was amiss. If industrial demand exceeded global supply alone, all other demand would create such a large deficit that the above ground stockpiles would be gobbled up in no time. I reckon the silver tin can could  be kicked a lot further down this road. Your assessment of a decline followed by a sharp bounce back is probably spot on.

 

[alor]

just buy some when it drop to new low, not sure about price paid. hope for cheaper price paid

 

[jason1]

That was a good conversation to listen to. This fella really knows his stuff when it comes to trading but he appears to only look at the markets through that lense. It's kinda odd that there's almost no commentary from anyone on the scene who understands the paper and physical markets. David Morgan is probably the closest we get to offering a comprehensive overview.

I reckon we could see premiums on silver increase again if we dropped to low $20 AUD silver. I'd be a buyer at those prices and I know many others would jump on that opportunity, too.

see heres the problem when people dismiss the spot price, Only a fraction of say silver goes into the retail bullion market, the rest goes into industry and industry does not pay the premuims we retail investors pay for silver, while spot maybe pushed down lower, heres the thing you still need to take into account thats the industry standard that value is based off. High Premiums are a retail thing.
the Bullion market is actually fairly small part of PM industry, basing an investment off premiums isnt really that useful. a Solar company who uses silver in their panels or circuit board company that uses gold in their boards isnt buying gold at high premiums, they buy very close to spot. I think we have this idea that all gold and silver is turned into over priced roo's and ten ounce bars, it isnt, a majority of it is sold to industry if the demand of it was as high as it many like to say it is, then the spot price would be much higher from industry alone.
the demand for retail bullion is higher, but its not high enough to change markets spot price, and they only make so much retail product each year, but they refine way way way way way more product for the industrial market than they turn into roos. so the only reason retail premiums are high is because of the limited amount they turn into coins. again if the industrial use was above supply, no amount of manipulation would hold back spot price.

Of course. Buying physical bullion means you're essentially entering two markets.

It doesn't matter if industrial use is above supply. Overall demand has been above supply for many years over the past decade. It's been slowly chipping away at the silver reserves held above ground and we're still seeing silver priced well below its ATH. For as long as there are above-ground stockpiles and they're used to offset increased demand, the Markets will continue to ride the carousel as if nothing was amiss. If industrial demand exceeded global supply alone, all other demand would create such a large deficit that the above ground stockpiles would be gobbled up in no time. I reckon the silver tin can could  be kicked a lot further down this road. Your assessment of a decline followed by a sharp bounce back is probably spot on.

industrial silver demand has slowed and been steady since film ended as king.  Even solar has not made up for the total short fall industrial silver demand since film got replaced By digital. an industry that had consumed 267,000,000 ounces of silver, that no longer does to that extent. well film made a bit of resurgence last year and this year when film photography made a brief trend. the market reacted to that slightly but it wasnt ground breaking. industrial trend has been more steady rather than Big highs as some might think.

So also consider the following factors, when economic slowdowns happen people stop spending, when people stop spending demand for goods goes down, and demand for the materials they are made from goes down. silver is made into things, so demand for industrial silver lowering needs tobe factored in.
as much as some may not like it, Silver is not used as money, its main utility is industry, which is a good thing, if it didnt have industrial value it would have far less value than it does currently.
Im not bagging on silver its a good investment if you dont fall for the bad advice and ignore spot and premiums

 

[STKR]

I just wrote this massive response and somehow it just disappeared as I was writing. I'll try and drum up the time and energy to write it out again soon.

 

[jason1]

I just wrote this massive response and somehow it just disappeared as I was writing. I'll try and drum up the time and energy to write it out again soon.

annoying when that happens

 

[STKR]

Andy schectman shares his thoughts on the Gold and silver markets dropping in previous economic crises. Ignore the second half of the video .... it's just trash.

[youtube]https://youtu.be/Z5Mo2ergr8M[/youtube]

 

[STKR]

@jason1

I was looking at the silver surveys for photographic film demand. In 1992, the demand from photography was 185 Million Oz's. A whopping 50% of total mine supply (holy shit!).

Solar panel (photovoltaic) demand in 2020 was 101 million Oz's. Up from 50 million Oz's in 2012. It hasn't quite offset the decline in photographic demand but it's slowly filling those shoes.

What has offset the demand in photography is the demand for coins and bars. In 1992 it was a meagre 29 Million Oz's. In 2020, it was 200 million Oz's!

Mine supply has more than doubled in that time (362Mozs > 784Mozs). But we've also seen a massive rise in demand from industry. In short, we have a market that is always on the verge of a deficit. It's easy to see how demand for solar panels and investment could double over the coming years, yet It's very unlikely we'll see a 50% increase in mine supply to offset this.

I agree with you on the Economic downturn points in large but don't think the decline of silver demand in photographic film is meaningful in today's market. Additionally, the "Silver is not used as money" comment isn't exactly true. Silver is being utilised as a store of wealth more now than it ever was since it was removed from our coinage. It may not be used as a medium of exchange or currency directly but it's being utilised to store that medium of exchange / currency in bullion form. In that sense, Silver Is being used as stored money (savings) more than it ever has been in our recent past.

 

[jason1]

@jason1

I was looking at the silver surveys for photographic film demand. In 1992, the demand from photography was 185 Million Oz's. A whopping 50% of total mine supply (holy shit!).

Solar panel (photovoltaic) demand in 2020 was 101 million Oz's. Up from 50 million Oz's in 2012. It hasn't quite offset the decline in photographic demand but it's slowly filling those shoes.

What has offset the demand in photography is the demand for coins and bars. In 1992 it was a meagre 29 Million Oz's. In 2020, it was 200 million Oz's!

Mine supply has more than doubled in that time (362Mozs > 784Mozs). But we've also seen a massive rise in demand from industry. In short, we have a market that is always on the verge of a deficit. It's easy to see how demand for solar panels and investment could double over the coming years, yet It's very unlikely we'll see a 50% increase in mine supply to offset this.

I agree with you on the Economic downturn points in large but don't think the decline of silver demand in photographic film is meaningful in today's market. Additionally, the "Silver is not used as money" comment isn't exactly true. Silver is being utilised as a store of wealth more now than it ever was since it was removed from our coinage. It may not be used as a medium of exchange or currency directly but it's being utilised to store that medium of exchange / currency in bullion form. In that sense, Silver Is being used as stored money (savings) more than it ever has been in our recent past.

Yes I know this, , I know its a store of wealth as i Own it for that very reason and have done so for over 20 years, even when silver was a very unpopular investment.
any commodity is a store of wealth, a house is a store of wealth, bars of lead are a store of wealth, but arent classed as money.
Now Yes solar will take the void more than likely, but as i said we have seen a rise in silver demand for coins and bars, but it isnt some big continuous highs, off the top of my head 2021 is still behind the 2013-2014-2015 days.even with that insane reddit silver squeeze funded by government money printing it still fell short of those days for coins and bars
Now saying that its well up from 2018-2019-2020 for coins and bars, but they were horid years for demand.
In the future I do think that will change the demand will rise, but during an economic downturn is what we are discussing here. when people dont have money they get desperate or at least prioritize their they sell their stacks so demand for new silver will fall from stackers. killing premiums and yes we have seen this in the past.
and as I said before, when people stop spending demand for goods goes down, and demand for the materials they are made from goes down. silver is made into things, so demand for industrial silver declines, and the less need there is for mining supply during that time, which starts hurting spot

mining supply is a concern now for sure, im not saying it isnt, But the part you have over looked is it wont mean as much when there is less silver consumed due to lower demand, less demand also means less pressure on supply from mines.

BUT as i have said many times, its always bounces back hard, But as like the number of times ive seen my stacking times, premiums tend to fall off even when the bounce back as there tend tobe allot of reckless investors who were forced to sell who dont return leaving a fair amount of metal on bouncing around on the secondhand market. it takes a fair amount of time for all that to end up back in other peoples stacks. as most of demand is from the paper market which pumps spot price up after they saw a bargain from the fall. not stackers or physical
You can go back through many of the old threads on silver price crashes to see that, its a good snap shot.
If the Gov didnt pump all that printed money into the economy over the last two years, this coin demand would not have happened, as every one would have been to broke to buy it. Just like how people used that government money to buy cryto, houses, cars, and all that many people used it to buy bullion pumping premiums. so you need to factor that in also as to why coin and bar sales were up over the last two years, thats why I discount the legitimacy on almost all markets over the last two years as its not a typical market all asset markets were pushed up by government handouts and that included silver, its not a typical trend we can use much.

 

[STKR]

Agree with just about everything there. I will add that less demand in an economic downturn also means less demand for base metals, which translates to less mine output and less silver supply.

I don't think we've ever seen a mainstream run into metals since 1979-80. That was a very different time than it is now and when FUD hits the masses this time, it's inevitable that a % of the population will look at Gold and silver for the first time.

Good points about the handouts and funny money driving demand. But it takes nothing to for the bullion markets to tap out. The silver market is way too small to accommodate even a fraction of a % of the population. I know a lot of people have been hanging on to this idea of the broader population making their way into metals, but it's absolutely true that there's only so many seats at the table. If you added up all the silver used to make coins and bars over the past 50 years (bullion), it would only be a few Billion Oz's. In the right environment, the private market may be last place to reliably source Silver, as the dealer's experience overwhelming demand and the pre-order times become excessive.

ABC bullion is a good example of this now. Government handouts have dried up yet they have all their coins on pre-order. The lower the price gets pushes down, the more demand for coins are bars globally.

We're also seeing a massive interest for Silver from India. This appears to be a continuing trend. I'm very optimistic about what the future holds for silver - both short and long-term.

 

[jason1]

Agree with just about everything there. I will add that less demand in an economic downturn also means less demand for base metals, which translates to less mine output and less silver supply.

I don't think we've ever seen a mainstream run into metals since 1979-80. That was a very different time than it is now and when FUD hits the masses this time, it's inevitable that a % of the population will look at Gold and silver for the first time.

Good points about the handouts and funny money driving demand. But it takes nothing to for the bullion markets to tap out. The silver market is way to small to accommodate even a fraction of a % of the population. I know a lot of people have been hanging on to this idea of the broader population making their way into metals, but it's absolutely true that there's only so many seats at the table. If you added up all the silver used to make coins and bars over the past 50 years (bullion), it would only be a few Billion Oz's. In the right environment, the private market may be last place to reliably source Silver, as the dealer's experience overwhelming demand and the pre-order times become excessive.

ABC billing is a good example of this now. Government handouts have dried up yet they have all their coins on pre-order. The lower the price gets pushes down, the more demand for coins are bars globally.

We're also seeing a massive interest for Silver from India. This appears to be a continuing trend. I'm very optimistic about what the future holds for silver - both short and long-term.

with India interest in silver its actually dropped off, there has been an increase from western countries that got the free money.
looking at this IMO this graph is a good example of why I think much has been driven by western countries stimulus money, this isnt un-usual as this happened in all asset classes.  what does not look good though is even with all that cash being splashed around its still mostly behind almost a decade ago and that was more natural then as we werent pumped with stimulus like we are now
the graph below is showing silver demand in the form of coins and bars over a decade by the most popular silver bug countries, and besides stimulus era its not been very strong. you have to wonder what that graph would have looked like with out stimulus money, I dont think it would have looked very pretty.
So taking that into account, if I thought that graph was showing a natural trend over the last two years I would agree with your points more, but I dont think it is showing a natural trend, I think that trend is showing covid money.

So for all the reasons ive outlined before and stimulus money which is still there to some extent in our country and others, demand will go down for a few years, spot will bounce back before industrial demand IMO because paper investors will see a bargain

I also noticed a trend with India, they only buy when its low, they are smarter than us westerners, they buy dips westerners seem to buy at the top, they seem tobe able to wait years for a lows before they start buying again, notice they didnt get suckered into this current pump

My point is not an attack on silver its a caution about people ignoring premiums and thinking they dont matter and banking on high premiums in the future. there are times to buy silver and times not to buy it, just like any asset class timing is important. Usually the best time to buy something is when the demand is low

 

[shinymetal]

I wonder how much of the stimmies world governments gave out went into the stock market, crypto and bullion combined? I imagine it's a decent percent.
I wonder how many people are down on those investments?

 

[jason1]

I wonder how much of the stimmies world governments gave out went into the stock market, crypto and bullion combined? I imagine it's a decent percent.
I wonder how many people are down on those investments?

a massive amount went to those, trillions.
the greatest wealth redistribution of all time, People sent it exactly to the place it was intended togo, into the pockets of the wealthy elites.
I think the only thing that will beat that redistribution of wealth is the climate BS, that will be a never ending wealth stream if things continue the way it is.

Most people im sure are way way down, especially the crypto boys

we have seen how playing the markets was a cool thing over the last two years, it was made very easy for the regular guy to pump all their money into it via new fancy aps and into meme stocks. Some of them even got rich for a brief second, but they played it too long and they are likely back to being broke again, simply because they never cashed in their winnings.

They played against pool sharks who let them win for a few games before taking it all back and then some.

 

[STKR]

Agree with just about everything there. I will add that less demand in an economic downturn also means less demand for base metals, which translates to less mine output and less silver supply.

I don't think we've ever seen a mainstream run into metals since 1979-80. That was a very different time than it is now and when FUD hits the masses this time, it's inevitable that a % of the population will look at Gold and silver for the first time.

Good points about the handouts and funny money driving demand. But it takes nothing to for the bullion markets to tap out. The silver market is way to small to accommodate even a fraction of a % of the population. I know a lot of people have been hanging on to this idea of the broader population making their way into metals, but it's absolutely true that there's only so many seats at the table. If you added up all the silver used to make coins and bars over the past 50 years (bullion), it would only be a few Billion Oz's. In the right environment, the private market may be last place to reliably source Silver, as the dealer's experience overwhelming demand and the pre-order times become excessive.

ABC billing is a good example of this now. Government handouts have dried up yet they have all their coins on pre-order. The lower the price gets pushes down, the more demand for coins are bars globally.

We're also seeing a massive interest for Silver from India. This appears to be a continuing trend. I'm very optimistic about what the future holds for silver - both short and long-term.

with India interest in silver its actually dropped off, there has been an increase from western countries that got the free money.
looking at this IMO this graph is a good example of why I think much has been driven by western countries stimulus money, this isnt un-usual as this happened in all asset classes.  what does not look good though is even with all that cash being splashed around its still mostly behind almost a decade ago and that was more natural then as we werent pumped with stimulus like we are now
the graph below is showing silver demand in the form of coins and bars over a decade by the most popular silver bug countries, and besides stimulus era its not been very strong. you have to wonder what that graph would have looked like with out stimulus money, I dont think it would have looked very pretty.
So taking that into account, if I thought that graph was showing a natural trend over the last two years I would agree with your points more, but I dont think it is showing a natural trend, I think that trend is showing covid money.

So for all the reasons ive outlined before and stimulus money which is still there to some extent in our country and others, demand will go down for a few years, spot will bounce back before industrial demand IMO because paper investors will see a bargain

I also noticed a trend with India, they only buy when its low, they are smarter than us westerners, they buy dips westerners seem to buy at the top, they seem tobe able to wait years for a lows before they start buying again, notice they didnt get suckered into this current pump

My point is not an attack on silver its a caution about people ignoring premiums and thinking they dont matter and banking on high premiums in the future. there are times to buy silver and times not to buy it, just like any asset class timing is important. Usually the best time to buy something is when the demand is low

I was hearing reports of unprecedented demand from India. Demand in 2020 and 2021 was exceptionally low - around 2,000 tonnes for the year. But 2022 has seen a massive increase in demand compared to those years.

"In the first seven months of 2022, silver imports surged to 5,100 tonnes".

It's estimated that India will import over 8000 tonnes of silver this year. I guess we'll have to wait and see what the final numbers are when more data comes out. But 5,100 tonnes is still 160 Million Oz's in 7 months from one country. 8000 tonnes would be around 260 Million Oz's - 1/4 of yearly silver supply!

https://www.reuters.com/markets/commodities/investment-demand-lift-indias-silver-imports-record-high-2022-08-17/

To be honest, the premiums on kilo bars aren't even that bad. It's the coins and smaller bars that have stupid premiums. Plenty of opportunity not to get caught up paying too much over spot for silver.

 

[STKR]

This chart can't be for total silver demand. The numbers don't add up. The name of the file is "Silver coins", so it may just be showing coin demand. Indian's like to buy jewellery for investment and gifts, too. Total silver imports would provide a better insight to annual consumption from india.

 

[jason1]

This chart can't be for total silver demand. The numbers don't add up. The name of the file is "Silver coins", so it may just be showing coin demand. Indian's like to buy jewellery for investment and gifts, too. Total silver imports would provide a better insight to annual consumption from india.

coin and bar demand world wide, essentially what we are buying, and big time investors are buying, as you can see the Indians arent buying physical right now, like they used too. as i mentioned