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Silver optimism

Smithys Bullion - FINE GOLD AND SILVER
STKR

STKR

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I can't help but feel we're at the beginning of a big move in silver. One that will go down in the history books. We've had record demand year over year and I really don't think they can continue supplying the markets with physical.

As history will show us, there's nothing like a banking crisis to attract more people to precious metals. In the 20 years before 2008, the average investment demand for physical was around 35 million Oz's. Since 2008 to now, we've averaged over 200 million ounces a year for investment grade bullion. Such a small amount of people own and buy silver around the world. A doubling of physical silver investment would be easily achieved, and the data indicates any significant increase in demand will be maintained in the years following.

We've had record silver demand year over year and overall mine supply looks to be at it's peak. With demand forecast to reach 1.4 billion ounces this year and mine supply looking to be around 850 million ounces, there's going to be a deficit of the likes this market has never seen.

I've analysed the silver surveys during the GFC and recognised supply from scrap metal refining increased significantly with the price of silver during that time. Then it settled back down. I was expecting to see a similar trend over 2020 and 2021, but his was not the case. Scrap metal refining contributes approx. 180 million Oz's per year to global supply. Mine supply and scrap metal refining make up around 1050 Million Oz's per year. The projected 350 Million ozt deficit has to come from somewhere if the price is to be maintained at these levels.

This brings us to above-ground available stockpiles. Current Transparent Silver Holdings are around 1.5 Billion Oz's. This is all the known silver held in repositories, mutual funds and ETFs...But how much is "Available"?  Much of this silver is used as a financial instrument to place hedging positions and is required for Silver ETF's and comex contracts. Most of this silver will not be available to mint into coins and bars for retail consumption.

It won't be long before the free market takes over and supply/demand fundamentals really start to make themselves known. I wouldn't be surprised if this was the beginning of something big. At the very least, the outlook for Silver looks fan-fkn-tastic!
 
With the banking crisis, large depositors are already shopping for 'safe' banks, the bigger ones that are 'too big to fail'. They're probably already shopping for safe-haven assets too.

https://twitter.com/unusual_whales/status/1636675744767291393
 
I feel with gold breaking free that it's little brother silver will get dragged along to the party as soon as people realise that gold is expensive vs silver and both essentially pay the same role.
I view it like banknotes vs coins
No one wants a pocket full of coins  for $100 instead of a $100 banknote but will switch if they can get the coins for half the cost. Eventually the true value will be realised (should be circa $50 atm an oz)
 
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Serial said:
I feel with gold breaking free that it's little brother silver will get dragged along to the party as soon as people realise that gold is expensive vs silver and both essentially pay the same role.
I view it like banknotes vs coins
No one wants a pocket full of coins  for $100 instead of a $100 banknote but will switch if they can get the coins for half the cost. Eventually the true value will be realised (should be circa $50 atm an oz)
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That's a an excellent point. Silver definitely presents the better opportunity for price increases on a % basis. Anyone looking into PM's for the first time will eventually see this. Gold may well be the best marketing tool for silver.
 
Exactly!
What we are seeing atm is financial muscle memory.  A primal reaction to the sudden change in risk to move to a safe asset deeply ingrained in people's mind. Gold
Once people start to get more sophisticated they will switch to silver driving the price up ina sort of equilibrium
 
STKR said:
Gold may well be the best marketing tool for silver.
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Exactly. When people start looking at gold they'll see that silver is way undervalued. Buy one oz of gold or ~3kg of silver.
 
My opinion is ignorant and amateur in relative comparison to seasoned members but I see the two as different beasts now. While silver is def cheaper to gold investment is silver is far more industrial...the metal it's self has changed nature from money and a genuine store of value to a commodity that rises with economic boom and industry alike to copper, etc. It's the cheapest asset of earth really and it's been allowed to stay there for so long, it's risen only to fall every single time. Gold is tier 1 asset larger market and allowed less restriction a true safe haven asset and still defined as money...In his testimony before Congress in 1912, American financier and investment banker J.P. Morgan stated, ?Gold is money. Everything else is credit. Silver has huge potential and more room to grow this we know but it's not a free market and its size allows easier long term "guidance" a price that stays low, rises,falls just imho.
 
Silver has definitely become predominantly an industrial commodity since it was removed from our coinage in the 1960's, but that's what makes it a better long-term store of value IMO. - specifically in our current times.

Even though it's not primarily used as money anymore, doesn't mean the qualities that made it money have eroded. Industrial consumption makes silver even more precious than before because it's become far more scarce than Gold (above ground) and is  more useful/utilised.

Most people who hold a long-term outlook for Silver recognise the strong supply and demand fundamentals. Looking at supply alone, Silver has (had) a natural ratio of 17:1 to Gold in the earth's crust. Mine supply, however, has dropped down to an insane 7:1 ratio. The Gold to silver ratio has never had more importance in our modern history than it does right now. The reasons is because silver is an industrial metal. Silver is needed. Gold is not. The world would move on if gold disappeared tomorrow. The world would come to a halt if silver disappeared. We need silver. So, whether or not silver has been classed as a tier 1 asset by the criminals who run the system, or whether it's in our coinage or used as money today, that doesn't mean it's not a store of wealth.

Historical price charts will show us that silver hasn't acted as a good hedge or a store of wealth like gold has... But this is for good reason. Almost nobody factored in the largely secret and undisclosed above-ground stockpiles when looking at the supply and demand fundamentals of silver in the past. Everybody seems to point at the comex and short positions held by bullion banks as the reason silver has been underperforming or "manipulated". These are simply surface level controls used to manipulate market psychology and contain speculative interest. Manipulation of the paper markets only go so far when we have physical supply deficits. The key to controlling the price has always been the use of above-ground stockpiles.

We get some good insight to how silver is manipulated by observing President Lyndon Johnson's remarks when signing the 1965 coinage Act - which served to remove silver from coins:

"Now, all of you know these changes are necessary for a very simple reason--silver is a scarce material. Our uses of silver are growing as our population and our economy grows. The hard fact is that silver consumption is now more than double new silver production each year. So, in the face of this worldwide shortage of silver, and our rapidly growing need for coins, the only really prudent course was to reduce our dependence upon silver for making our coins.

If we had not done so, we would have risked chronic coin shortages in the very near future."

And here's the kicker:

"If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content."

https://www.presidency.ucsb.edu/documents/remarks-the-signing-the-coinage-act

President Johnson outline the absolute intention to implement price controls on silver by utilising stockpiles. The question is though, how much is left? We can only speculate but we do have some insight via the silver surveys:

https://www.silverinstitute.org/all-world-silver-surveys/

Prior to 2015, the Silver Surveys recorded 'Net Government Sales'. These surveys show the government's involvement in the silver markets over decades. They've always swooped in to supply the markets in times of deficit since the data has been recorded. No government sales have been recorded since 2015 - indicating they are no longer supplying the markets directly.

Looking deeper into this, I believe that's why SLV (iShares Silver Trust) was created - to use the remaining stockpiles to further control the price of Silver - a desperate attempt to make the most of what they have left. You can see from the chart below a massive volume of silver entering SLV repositories in 2006-2007.. right before the GFC. It shows a 450+ Moz transfer into SLV from somewhere. I think this is the best idea we have as to what's available when we look at above-ground stockpiles.

The question is: How long can a 350+ Moz deficit be sustained? I think we're nearing the end of it... And I think silver not only represents a supreme store of value compared to Gold but certainly a much better investment opportunity.
 

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Very few people seem to see the link between this current depopulation agenda (Agenda 2030) and this push into 15 minute cities, and how it actually has something to do with silver itself. Silver has been the Achilles heel of the system this whole time. More specifically, global resources - of which Silver takes the lead when it comes to utility, below ground reserves and above-ground stockpiles.

Our NEED for silver will become most apparent before any other resource on a 'known reserves' basis. If consumption continues to remain steady or increase, and supply continues to remain steady or decrease, it's inevitable that the price of silver will explode into the triple digits - without factoring in inflation, increased production costs and premiums.

The only thing that can prevent this is a massive decline in consumption, or a massive decline in population, or both. Neither of these should be dismissed from the equation because that's exactly what we're heading towards. Before recognising this, I thought silver would be the best and most secure investment for 30-40 years... But not anymore. I think we have much bigger things to worry about over that time period. All I know is that I'd rather have silver and gold than worthless currency in the bank, and I will continue to stack for as long as I see value in doing so.

Keep in mind that a decline in population and consumption will have the same effects on all resources and assets from a supply and demand perspective.
 
Excellent and relevant points mate  :) majority of which def attracted me to silver in the 1st place. Afew years ago I was sucked In to the hype but, the true ratio is off as is the mining ratio...but as it's primarily mined as a byproduct and mining it alone is not deemed profitable that's why imo there's so few pureplay silver miners. I still have a good amount of physical but have put quite abit more funds into a diversified miner that owns one of the largest producing mines and has another one in preparation to come online within next few years.
 
Real Money said:
Excellent and relevant points mate  :) majority of which def attracted me to silver in the 1st place. Afew years ago I was sucked In to the hype but, the true ratio is off as is the mining ratio...but as it's primarily mined as a byproduct and mining it alone is not deemed profitable that's why imo there's so few pureplay silver miners. I still have a good amount of physical but have put quite abit more funds into a diversified miner that owns one of the largest producing mines and has another one in preparation to come online within next few years.
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The interesting thing about silver being mostly a byproduct of mining copper, lead, zinc and gold is that by 2028-2032 we're set to reach peak copper, lead and zinc mining. The data suggest we have already reached peak gold mining but all of this together translates to lower mining output of silver.

Additionally, we need primary silver mines to supply the market. They may only make up 20% of supply but that 20% is essential. The All In Sustaining Costs (AISC) of primary miners are critical in determining how low the price of silver can go before the price rebounds. Mines will shutdown if they can't be profitable and we've seen this happen many times before. I used the average primary silver mine (AISC) as a guide to buy over the years. I've acquired most of my stack in times where silver was cheaper to buy in coins and bars at a dealer than it cost most primary silver mines to produce it. Talk about undervalued insanity!!

As for mining stocks, the opportunities there are great. But as you're aware - only physical Silver (and Gold) offers an investment opportunity with no counterparty risk. It's the security, insurance and peace-of-mind that I seek.

I just want to hold tangible wealth and move on with my life. The fact that PM's also present an excellent investment opportunity is a bonus for me, and any trading within the system consumes my life in ways that I cannot justify. It distracts me from other important matters and I tend to obsess over my positions by analysing the markets on the daily. It almost becomes a part-time job for me but simply because I allow it to.

Plus, the mining stocks get their value by piggybacking off the value of the resource. A bid on the physical metal is also a bid on the mining sector and vice versa. One just represents more opportunity and risk. One can go to $0 while the other maintains it's position. I see stocks like a leveraged trade if you only seek an investment opportunity. Nothing wrong with that at all, it just doesn't suit me.
 
A wealth of knowledge here among stackers, used to hold nothing but physical but cash inflow especially now poor so the dividends reinvested back into stocks allows for passive investment and way for me to keep acquiring when don't have free cash to keep investing. It's an amateur approach but hopefully on long enough timeline it will allow for stability and some growth. Years back went to much into silver bought high premiums from dealers and collector pieces only to see them spot and lose condition even when done what I knew to preserve and store them, still rather buy real assets with intrinsic value but silver collectibles can be real bitch and def lost cash.
 
Yes silver rounds you need to be very careful in what you want to stack. Over the many years I've been pondering the risk to buy versus reward resale has been the 37 silver crowns a winner in its class, and the most outstanding numismatic of modern times are the rare NORFED silver dollars. These command very high premiums for their rarety and the story behind them.  Rounds are a long-term hold and you won't realise profit in your lifetime but someday they will be worth ? Who knows? When I first looked at a 1930 penny to buying my younger years they wanted $2,500 well today what can I say ::)
 
just look back at those 1oz bars, be it PM, ABC, HAR, E etc. they seems to have done VERY well.
generic are not recommended, as not all are the same.
 
I often have a chuckle when I go to ABC Bullion's website and see the price of silver sandwiched between gold and platinum. $34 seems like a mistake.

We have a Silver to Gold mining ratio of 7:1. Based on the mining ratio alone, and how important silver is as a commodity, one would expect the price of silver to be in the realm of $425. With similar supply and demand fundamentals to Gold, the mining ratio of each metal is very relevant. The difference is, TPTB have a lot of Gold available to manipulate the markets. We know that most of the gold ever mined is held in vaults.

IMO $425 is Silver's true value relative to Gold. If the Gold market is manipulated and the price of Gold is suppressed, $425 becomes Silver's baseline value in respect to Gold. $34 looks absolutely absurd when it's compared in this way.


 

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its too obvious as in transparent for us to see, but to the normal...they can not see.
it will become more and more clear, clear as in reflecting lights
it will get there
when the rush in is on play, it will be SOLD out in an instant, just like the online bank run inside SVB
get them while it last
 
I'd imagine there'd be a lot of selling along the way once it gets to $50 and $100. A lot of silver held in private stacks will make it's way to the market during that time. A lot of jewellery will be melted down and I expect scrap metal recovery will increase at a certain price points.

I think an economic collapse is the only saving grace to prevent the markets from dumping once a certain price threshold is reached. There really isn't enough to go around when the SS Collapse sets off on her voyage.
 
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