The Silver Market is on the verge of being overwhelmed by investment demand. While this has been a steady process over the past decade, the situation changed rapidly in 2020, and especially in the last two months. Since the WallStreetBets “SilverSqueeze” campaign, more investors are waking up to the SILVER STORY.
There’s now even a new GoFundMe Campaign that has raised over $57,000 to promote the Silver Squeeze Theme to the public. It seems that Social Media is now becoming a much larger MOUTHPIECE for Silver.
In my newest Youtube video, BREAKING THE SILVER MARKET: Investment Demand To Overwhelm The Market, I provide how the dynamics of the Silver Market are changing rapidly. However, we don’t need another Bunker Hunt, SilverSqueeze campaign, or a Billionaire Hedge Fund to overwhelm the silver market… IT WILL DO IT ALL BY ITSELF, due to the fundamentals.
Although… it’s FUN to watch this sort of activity because it will only speed up the process.
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Been saying for a couple years…..
“Still very much think that the ‘key’ to SILVER is/are ladies across the USA waking up to it as real wealth. So much so that there is no hesitation choosing 5 or 8 more ounces over a new pair of shoes or some coveted Amazon delivery. Ladies talk. Ladies are so much more networked socially than men. When Ladies can’t stop talking about SILVER ….breaking $36 dollar Silver will be remembered as a speed bump.”
We’re getting a lot closer.
4 oz,
Always nice to see your comments. The first important level for Silver is $27.50. A CLOSE above that on a Quarterly BASIS will suggest much higher prices ahead.
steve
It’s so hard for me to think of ETF purchases as legitimate physical investment. I sincerely doubt they bought the quantity they were supposed to by their own structuring documents in the last ETF buying frenzy, regardless of whether those documents were filed with an organization like the Security & Exchange Commission or not. Even if they tried to I don’t think they could have sourced it all. Anyway it is some kind of pressure on the wholesale market[s].
Regardless, the increased investing in physical metal delivered to individuals, pension funds, or organizations will continue [Cloud buys physical for some small to medium organizations, even churches, that want something they feel is solid for the future]. And physical delivery will increase.
I do see growth in industrial demand as a factor too; “green” industries supported by government, including rechargeable batteries, a plethora of new electric vehicles hitting the market, photovoltaic applications [e.g. India and China], etc. Something that triggers buying greater than normal by industry may be a supply/demand “black swan”.
The last chart is the chart of the century. The ratio is so wrong and people cant see it. I have only been investing in PMs for a year but it only took me a few weeks to realize how wrong the gold to silver ratio.
I’m all for the silver squeeze but like you said, its not required. I think this is just the campaign to wake the public up to the scam of wealth theft.
Thank you Steve for your research!
Chris,
You are apart of a rising trend of investors that really never considered the precious metals. However, I see the number of precious metals investors moving up exponentially, right at the very time the SUPPLY will be virtually NON-EXISTENT, but only at much higher prices.
steve
Great article and presentation once again Steve. I do want to ask you, do you find it curious that the Silver futures forward curve does not reflect any significant signs of stress? If there was a real short squeeze on 1000oz silver bars, what the contract is based upon, then I would expect to see the curve go into backwardation, at least to a level that would incentivize those holding silver to sell and take delivery on futures.
I’ve seen a couple of times last week that we did get some instances of backwardation, but no more than .01 to .015 cents, and never for more than a day. Is there some dynamic in the silver market that I’m unaware of, or is the market still able to procure 1000oz bars rather easily?
GoStars,
There seem to be some GAMES being played behind the scenes and while we don’t have OUTRIGHT Backwardation in the futures markets, the SHORTSQUEEZE that I am referring to is a process that will take time, over the next several months and years. Let’s just say, it’s based on “ACCUMULATIVE FUNDAMENTALS” that will continue to put a SQUEEZE on the Wholesale and Retail silver markets.
Check out this article: https://www.adamseconomics.com/post/the-silver-market-fast-approaches-breaking-point
steve
Near the end of the article you link to above, it states:
“Looking forward, the March 2021 COMEX silver futures contract is on track to be the largest delivery month in the history of the market, outpacing the prior record set in July 2020.
Forward delivery months such as May 2021 also show a strong level of demand for physical silver through elevated levels of open interest.
Record demand for the delivery of physical silver via the COMEX in the coming weeks and months coupled with unprecedented demand observed in February 2021 and visible signs of acute stress within the physical market provides the necessary conditions for a sharp accelerated rise in the price of silver moving forward.”
*But in a recent post Technical Trader states:
TacticalTrader | February 28, 2021 at 10:39 am | Reply
It has always been my understanding that there is no such thing as standing for physical delivery either on the COMEX or in ETFs. They can and will settle in cash.
Both of these statements can’t be true.
What I meant by that comment was that it never happens that large entities stand for delivery of physical metal at the COMEX or in ETFs. Everyone trades on margin and trades are usually, 97.5% of the time, settled in cash.
Rarely do customers of COMEX clearing members stand for physical delivery.
The COMEX delivery process is complex and is explained in the COMEX rulebook: https://www.cmegroup.com/content/dam/cmegroup/rulebook/NYMEX/1/7.pdf
There are position limits per account in place, so that oversubscribed metal can still be delivered in those rare 2.5% of cases.
However, the COMEX is untouchable even in the unthinkable case of a clearing member’s failure to deliver. See here: https://www.cmegroup.com/trading/metals/files/precious-metals-delivery-process.pdf
“In a delivery failure, the Clearing House shall ensure the financial performance to the clearing member whose actions or omissions did not cause or contribute to the delivery failure (the Affected Clearing Member). In this regard, the Clearing House powers will include, but will not be limited to, the right to sell or liquidate the commodity subject to delivery and to distribute the proceeds as appropriate.
Financial performance means payment of the commercially reasonable costs of the Affected Clearing Member related to replacement of the failed delivery and includes any related fines, penalties and fees incurred by the Affected Clearing Member and does not include physical performance or legal fees.
An Affected Clearing Member seeking financial performance from the Clearing House shall provide prompt notice to the Clearing House of the delivery failure and a good faith estimate of any financial performance being sought no later than 1 hour after the delivery deadline for the respective product, or longer under extenuating circumstances. The Affected Clearing Member seeking financial performance shall provide to the Clearing House a detailed statement, with supporting documentation, of all amounts sought.”
And the ETFs have already updated their prospectuses, as Steve has shown as well. Just to reiterate, here is what the SLV says now:
“The demand for silver may temporarily exceed available supply that is acceptable for delivery to the Trust, which may adversely affect an investment in the Shares.
It is possible that Authorized Participants may be unable to acquire sufficient silver that is acceptable for delivery to the Trust for the issuance of new Baskets due to a limited then-available supply coupled with a surge in demand for the Shares.
In such circumstances, the Trust may suspend or restrict the issuance of Baskets. Such occurrence may lead to further volatility in Share price and deviations, which may be significant, in the market price of the Shares relative to the NAV.”
So, the price of silver will go up tremendously but it won’t be because of physical deliveries at the COMEX or ETFs.
“So, the price of silver will go up tremendously but it won’t be because of physical deliveries at the COMEX or ETFs.”
Definitely not from the ETF’s. But the silver bars held in NY and London [by who knows whom] will one day end up somewhere; settling some debts, or sold with the Comex contract holders & EFT shareholders holding an empty bag.
Physical delivery is so passé !
Even by the Mint.
😂
Base metals production is going up. As a result of such, silver supply is going up. How does this affect silver price?
It’s being sold into deficit, so supply is net same. Or demand far outstripping supply so far. And it takes time [many months] to increase base metal production, and the silver by-product.
If base metal production is increasing, it’s to meet increasing industrial demand. Increasing Industrial demand might also consume a portion of the extra silver produced.
“….I am referring to is a process that will take time, over the next several months and years.”
Years? It’s hard to imagine the current situation is stable for YEARS to come. But then again, I didn’t think the QE etc… would be as massive as it was either.