The world has no idea that the present ENERGY CRUNCH is setting the stage for much higher silver prices in the future. As world energy prices are surging in Europe and Asia, investors haven’t yet figured out this is terrible news for global equity and bond values. Thus, the $230 trillion worldwide stock and bond market is counting on business as usual to continue… forever.
Unfortunately, the world has built up its economies now beyond what the energy industry can supply at a sustainable level. This is especially true for China which devours over 4 billion tons of coal every year, 8 times more than the United States in 2020. Even with record coal production 1H 2021, China has been shutting down industries to cope with coal shortages.
COMING OUT SOON: Analysis on Fortuna Silver Mining Company not found anywhere else on the internet, including the Energy Dynamics for each country that Fortuna’s Silver and Gold Mines are operated in. It is important to understand each country’s energy dynamics and which are highly dependent on energy imports for the mining industry.
For example, Fortuna Silver’s newly acquired Roxgold Yaramoko Gold Mine in Burkina Faso, Africa, gets its Electricity mostly from burning oil (diesel). With 84% of Burkina Faso’s Electricity generation coming from oil, 98% of that is imported. Mining Stock Investors should understand the energy dynamics for each country.
This Fortuna Silver Mining Analysis will be for GOLD MEMBERS.
But, this is only one dynamic. Because European Union believed in the GREEN ENERGY MYTH, it is now experiencing the HANGOVER as natural gas exports aren’t large enough to meet global demand. This is partially due to ramping up Wind & Solar Power that needs to be balanced by natural gas electricity generation when the wind stops blowing and the sun stops shining. Several European countries experienced significant declines in Green Energy generation this past year. We wish Europeans all the best this winter.
In the past, wild price swings were typically experienced by third-world countries, such as Venezuela. However, when you see the Dutch Natural Gas TTF price resemble the Venezuelan Caracas Stock Exchange… you realize, something has seriously gone wrong.
The Dutch Natgas Price fell to a low of 3.00 Euros during the Pandemic Shutdowns, which allowed European natural gas stocks to rise to record levels. However, with a cold winter and lousy Green Energy Wind & Solar Power generations, Europe is panicking to get more natural gas to fill its low inventories before winter hits.
WHY IS THIS IMPORTANT FOR SILVER??
Currently, the market is valuing silver the same way as the European Market valued natural gas during May 2020 when the price fell to 3.00 Euros. The market TOOK FOR GRANTED natural gas supplies and is now in serious trouble as Natgas Futures arent Natural Gas Inventories. One is a financial instrument, and the other is REAL NATURAL GAS.
This is precisely the same dynamic taking place in the Global Bond & Equity Markets. The world believes the value of stocks and bonds is worth nearly $230 trillion, and I can assure you… they aren’t. The market hasn’t figured it out yet. So, with World Silver Investment stocks being a fraction compared to Global Bond & Equity values, the market has taken Silver Investment FOR GRANTED… just like Europeans took natural gas for granted last year. How quickly things changed… eh?
First, let’s look at my updated estimate of Total World Public Silver Investment Stocks as of September 2021. These represent the silver listed by the LBMA, COMEX, Shanghai Futures Exchange, Shanghai Gold Exchange (estimated), and Royal Canadian Mint (custodians for Sprott Silver ETFs).
IMPORTANT NOTE: Total Sprott Silver Inventories for two silver ETFs equal 220 million oz, not 160. This will not change the overall values all that much, but I wanted to make that update.
Secondly, with publically listed silver investment stocks at 2.1 billion oz, that represents $50 billion in value at $24. Furthermore, considering the total physical silver bar and coin demand since 2000 is an additional 3.1 billion oz worth approximately $80 billion.
Of the 3.1 billion of total physical silver bar and coin demand from 2000 to mid-2021, Silver Eagles and Maples represented 818 million oz, or 26% of the total. However, we must remember, large institutions or high-net-worth individuals cannot access much of the 3.1 billion of privately held silver. While investors holding silver bars and coins can sell metal into the market, this is typically repurchased by retail investors. If financial institutions or high-net-worth individuals want to get exposure to silver, they will have to try to acquire the silver mainly held on Exchanges or ETFs. And, there are only 2.1 billion oz, or currently $50 billion worth of silver available.
SILVER ETFs MAJOR FUTURE PRICE DRIVERS FOR THE SILVER PRICE
Just like what we are witnessing in the Energy Spot Futures Markets, the same will happen with the silver market. I forecast that the future price surges in the silver market will occur first in the Futures and ETFs. Why? This is where the large financial institutions and high-net-worth individuals have the most availability.
While the precious metals community continues to label most Silver ETFs as Fraudulent (except Sprott’s Silver ETFs), they fail to realize this is where most of the SILVER GUNPOWDER is stored. We don’t see European Energy Players going to retail stores to buy small 20 Gallon containers of Propane or Natural Gas… do we? That would be insane. The same will be true in the future for larger investors getting into the silver market.
So, why do I forecast a huge increase in Silver Investment demand in the future? It comes down to the figures shown in the chart below. Currently, the world holds nearly $230 trillion in global bonds and stocks. Now compare that to the $130 billion (5.2 billion oz) of total estimated public and private above-ground investment stocks.
But, as I stated, the market can really only access the $50 billion of silver held at the LBMA and futures exchanges. But, even if we consider all total above-ground silver investment stocks of 5.2 billion oz, valued at $130 billion, that is 0.05% of total global bonds and stocks.
We must remember, global stocks and bonds get their value from burning ENERGY. And, the world must burn even more energy to continue giving them value. With the world adding a staggering $17.5 trillion of new bonds just in 2020, to prop up the global economy from the pandemic shutdowns… Bonds are no longer high-quality stores of value or collateral. They are now PONZI FINANCE.
When investors begin to realize Stocks & Bonds are not going to hold their value, especially as the world heads over the ENERGY CLIFF, investors will move into silver to protect wealth. Just $50 billion of the $230 trillion transitioned into silver would push the price up 2-3 times the current value. What happens when $100, $250, or $500 billion try to move into silver??
This is the same scenario not considered by the Europeans last year when the price of Natural gas reached a low of 3 Euros. However, with silver, it will be the realization that Silver STORES ENERGY VALUE, whereas, STOCKS & BONDS are ENERGY IOUs.
And, who holds the most stocks and bonds in the world? Correct… Americans. According to the SIFMA 2021 Capital Markets Report, the U.S. market held 38% of global stocks and bond values. Thus, the United States is the largest Financial Bubble in world history.
It’s for this very reason, investors should own precious metals to protect some of their wealth from the coming FINANCIAL STORM. Here at the SRSrocco Report, we provide details on the changing ENERGY DYNAMICS that drive the global economy. For those Free Members or new followers, you may want to consider becoming a SUBSCRIBER by checking out our MEMBERSHIP LEVELS.
DISCLAIMER: SRSrocco Report provides intelligent, well-researched information to those with interest in the economy and investing. Neither SRSrocco Report nor any of its owners, officers, directors, employees, subsidiaries, affiliates, licensors, service and content providers, producers or agents provide financial advisement services. Neither do we work miracles. We provide our content and opinions to readers only so that they may make informed investment decisions. Under no circumstances should you interpret opinions which SRSrocco Report or Steve St. Angelo offers on this or any other website as financial advice.
Check back for new articles and updates at the SRSrocco Report. You can also follow us on Twitter and Youtube below: