Silver Market Poised For Big Reversal When Institutional Investors Move In

The Silver Market is going to experience a big reversal when the Hedge Funds and Institutional investors rotate out of highly inflated stocks and into precious metals investments.  This is not a matter of if, it’s a matter of when.  And the when, could be much sooner than we expect due to the huge problems with the U.S. debt ceiling deadline on March 15, 2017.

As I mentioned in my previous article, POWERFUL GOLD & SILVER COILED SPRINGS: Important Charts You Have To See, I posted this chart of the 2,000 point drop in the Dow Jones early in 2016 versus a huge spike up in gold and silver:

At the beginning of 2016, the Dow Jones Index fell to a low at 15,600 level, 5,000+ points lower than what it is trading currently,while the gold and silver price surged higher.  The fundamentals of the Dow Jones Index is more rotten than ever.  Wolf Richter wrote about this in his article, Dow Companies Report Worst Revenues since 2010, Dow Rises To 20,000 (LOL).

Furthermore, the Dow Jones Index is seriously overdue for a correction:

According to the economic contraction cycle that occurs about every six years, the Dow Jones Index is severely overdue for a good ‘ole fashion beating.  If we assume that a normal correction for the Dow Jones would be for it to fall to about 8,000 points, the index is overvalued by at least 60%.   And that is just for starters.

So, when the Dow Jones Index and the broader stock markets finally crack, we are going to finally see Hedge Funds and Institutional investors rotate out of the majority of highly inflated stocks and into the precious metals and mining sector.  This will have a profound impact on the price of gold and silver as well as their mining companies share prices.

To get an idea how this will impact the Primary Silver Mining sector, I compared it to the largest U.S. oil company in country, ExxonMobil.  ExxonMobil is listed on the Dow Jones Index as one of 30 industrial stocks and has the highest market cap of all the energy companies in the United States.

What Will The Impact Be When Hedge Funds & Institutional Investors Move Into The Silver Market?

According to Michael Belkin of the Belkin Report, he put out a buy signal on his top Primary Silver mining companies during an interview on King World News last month.   Now, Michael was one of the few who made a call back at the end of 2015 advising his clients (and those who subscribe to his new gold stock newsletter) to get into the gold mining sector.  And at the beginning of the year, the price of gold and the gold shares shot up considerably.  Then a month later, he made a call advising his clients to get into his group of Primary Silver mining stocks.  Over the next several months, the Dow Jones Index crashed while the price of silver and the silver stocks surged higher.

Belkin, who has large institutional clients is now advising them to get out of the most of the broader market stocks and into other assets such as the precious metals, especially the silver stocks.  He is one of the few analysts that I respect as he does not get paid by the mining companies to promote their stocks.  He suggests certain stocks through his own analysis and models.  Belkin believes the broader markets are going to finally correct BIG TIME this year and that one of the few sectors to move into will be the precious metals.

If we look at the market cap of ExxonMobil versus the ten top primary silver mining companies in the world, we can plainly see how much potential there is in the primary silver mining sector:

 

ExxonMobil has a market cap of $344 billion (at the time when the chart was created) compared to $27 billion for the top ten primary silver mining companies.  These top ten primary silver miners include, Fresnillo PLC, Pan American Silver, Tahoe Resources, Hecla, Coeur, First Majestic, Silver Standard, Fortuna, Endeavour Silver, and SilverCorp Metals.

Actually, half of the total market cap of the group was from Fresnillo PLC which is $13 billion.  This means, ExxonMobil’s market cap is nearly 13 times greater than the total of the top primary silver mining companies in the world.

NOTE:  There are other large silver producing companies in the world such as Hochschild out of Peru.  However, I wanted to focus on the largest (Fresnillo) and those mainly trading on the U.S. exchanges.

Next, lets compare the total outstanding shares between ExxonMobil and these top primary silver miners:

Currently, ExxonMobil has 4.15 billion outstanding shares versus a total of 2.5 billion for the top ten primary silver miners.  Thus, the largest oil and gas company in the U.S. and on the Dow Jones Index has two-thirds more outstanding shares then the top 10 primary silver miners put together.

So, how do the stock prices of these two compare to each other?  When I put together these charts last week, ExxonMobil’s share price was $82.90 versus an average $10.90 a share for the top ten primary silver miners:

With the oil and silver price lower this week, these figures shown above are lower, but still reflect about the same ratio.  Regardless, the top primary silver miners average share price for the group is about eight times less than ExxonMobil.  However, the interesting thing to understand is that any significant amount of funds flowing into the primary silver miners will cause their share prices to move up a lot higher and faster than ExxonMobil.

If the market cap of each doubled, this would be the result on their share prices:

It would take $344 billion to double the market cap of ExxonMobil to $688 versus just $27 billion (to $54 billion) for the top ten primary silver miners.  Which means, it wouldn’t take much in the way of funds moving into the primary silver mining sector to double its market cap, and share price compared to ExxonMobil.  While it is impossible to know how much money or trading volume would be needed to double the market caps of the two listed above, logic suggests that the primary silver miners will experience a much higher surge in share price with much less in the way of total funds versus ExxonMobil.

Furthermore, a weakening economy and falling Dow Jones Index would likely result in lower oil prices.  This will be bad news for ExxonMobil and the energy sector shares.

Now, one of the most fascinating comparisons between ExxonMobil and the top ten primary silver miners is their percentage on total production in their various industries.  ExxonMobil produced approximately 2.5% of total global liquid oil production in 2016, compared to the top primary silver miners producing 18% of total world silver supply:

As we can see in the chart above, ExxonMobil’s portion of total world liquid oil production is that tiny sliver of white at the bottom of the bar graph.  However, these top 10 primary silver mining companies produced 18% of total global silver mine supply last year.

Yes, it is true that the value of liquid petroleum that ExxonMobil produced last year was much higher than the total value of silver produced by these top ten primary silver mines… but guess what???  All that oil has been either burned or consumed by the market, while a good portion of that silver was acquired by investors or is used as jewelry or silverware that could be brought back into the market as a high quality STORE OF VALUE.

While oil is strategically important to our modern society, it is nothing more than a mere commodity, burned and consumed.  Gone forever.  On the other hand, while silver does act as a commodity due to its industrial uses, a large portion of its demand is based on investment demand.  Which means, silver still functions as a store of wealth… just like it did 2,000+ years ago.

When the markets finally crack and the Dow Jones Index falls off a cliff, Hedge Funds and Institutional investors will move into the precious metals with even more leverage and a greater amount of funds than what took place during the beginning of 2016.  Of course, the Fed and Central Banks could postpone the market correction for a while, but the longer they do so, the harder and faster the inevitable decline.

I believe Michael Belkin’s analysis is correct that there will be few decent stocks or sectors to move into when the highly inflated markets finally tank.  Thus, when BIG MONEY moves in the silver market, it will cause the silver price and the silver mining shares to surge.  How high will be anyone’s guess.

Lastly, I wanted to compare some of the top U.S. oil and gas producers market cap versus the same ten primary silver mining companies:

These top ten U.S. oil companies market cap was $855 billion compared to the top ten primary silver miners at $27 billion.  The combined market cap of the top U.S. oil and gas producers is nearly 32 times higher than the top primary silver miners.

In the future when demand for physical silver overwhelms supply, investors will move into the next best thing.. the primary silver mining shares.  Because there are so few primary silver miners, any significant amount of funds moving into this sector could reach insane levels never imagined today.

IMPORTANT NOTE:  I appreciate everyone’s patience during our new site upgrade.  My webmaster Peter has finally upgraded the site and it should be now seen by most across the world.  It could take a bit longer for some as the propagation is complete.

You all will notice that the site is not much different than the old site, but there are some small changes and additions.  However, the most important upgrade was the LOAD TIME.  My site has been suffering problems in the past (including many different ERROR codes) that impacted its load time.  A few months ago, it would take upwards 15 or more seconds to load.  Now, it loads very quickly in 3-4 seconds.

I would enjoy hearing and comments or replies on what you all think of the new site.

best regards,

steve

Check back for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter, Facebook and Youtube below:

Enter your email address to receive updates each time we publish new content.

I hope that you find SRSroccoReport.com useful. Please, consider contributing to help the site remain public. All donations are processed 100% securely by PayPal. Thank you, Steve

37 Comments on "Silver Market Poised For Big Reversal When Institutional Investors Move In"

  1. Thought I would try and be first in here today Steve 🙂

    The new format looks very neat and tidy, I like it assuming this is the finished product.

  2. Lots of graphics, and it loads fast on a slow machine on a bar Wi-Fi.

    Thanks.

  3. There’ll be plenty of lube for those shafts!!!

  4. The DJ 6-year cycle has been extended by the huge cash inputs directed by the PPT/FRB. It can’t go on forever, unless they find destroying the currency acceptable, then it can go on until it can’t. It’s a great time to buy physical silver and stack it under new concrete pour at the farm.

    • “stack it under new concrete pour at the farm.”

      reminds me of those roman coin stashes europeans occasionally find buried here and there. “the barbarians are coming! hide the gold!” the barbarians come, and … that’s all.

  5. Steve,

    It would be great to compare the oilcompanies Cap and silver miners cap in 1980 en 2011
    to see the difference over time. Site looks very simular as old one which is pleasent
    as I was used to the old design.

  6. “The Silver Market is going to experience a big reversal when (fill in the blank).”

    “This is not a matter of if, it’s a matter of when.”

    yeah, but, I’ve been hearing this since the 1970’s. I’m dyin’ of old age here ….

    “I would enjoy hearing and comments or replies on what you all think of the new site.”

    works great, loads in five seconds or so.

  7. I applaud your upgrade and your news. Listening to Tom Cloud these past 8 years was a
    tremendous mistake. He has been wrong every year since I started reading his comments
    in 2010. The 1.6 billion Muslims ain’t buying silver, the people in India have not moved to
    gold, Shanghai has no effect, China’s increase in solar panels has little effect. The truth is
    demand for silver, which is a tiny market compared to other commodities, truly sucks. Maybe
    you will finally understand that it’s demand that increases silver pricing. Tom Cloud is a
    SELLER of silver for a commission. He’ll also hold it for you. His hype has harmed quite a
    few investors these past 8 years. Do what you do best Steve and avoid this guy like the plague.

    • Geez Joe!!!! you sound like my wife Lol Rome wasn’t built in a day. Remember the “Dam Busters”? movie. It didn’t take long for the cracks to appear after the blast…. Lol

    • DisappearingCulture | March 10, 2017 at 9:13 am | Reply

      Joe,

      WHERE have you been listening to Tom Cloud for 8 years? he was introduced by Steve in early 2016, or late 2015. So I think your memory is faulty. Also if you don’t like what he has to say…DON’T. I think you have only been listening since Steve started featuring him. Pharmacuticals have harmed people. Don’t pay attention to their ads. Don’t pay attention to things that make you miserable.

  8. Steve,

    Great job on the site. Faster with lots of attention to detail improvements.

    They have been hammering the hell out of silver the last couple of days but it is beginning to fell like they may be getting more desperate. These last two years the movement in the silver market has been like catching a marlin on fly tackle – you can’t manhandle it, you just have to work it until it runs out of steam. Every time it gets close to the boat it makes a run back down and seems to take a lot of work to get it turned around. The good news is that each dive run is shallower than the one before. Each time it takes another dive, I buy as much as I can. One of these times it is going to come out of the water right into the boat. I can’t help but feel that time is rapidly approaching. Trump is a lot smarter than people give him credit for. He knows and understands the debt problem and the complications of an appreciating dollar. He is going to borrow like a madman for the military, for infrastructure, for tax cuts and maintaining medicare and social security. When he gets enough done (or as much as he can) he, or the market, will massively devalue the dollar thus effectively reducing all debts and decimating the piles of paper profits of the 1%. He doesn’t give to hoots about paper assets, he is a real estate guy will tangible assets. They may plummet in dollar value but their utility value doesn’t change and the debt is rendered worthless. Looks like a win-win to me.

    • Hi Steve W.

      I think you hit the nail on the head. Trump knows the dollar is toast in the end, but knows that he needs to catch the political (spend -spend- spend) winds full sail to pay for his pet projects (infrastructure, tax incentives to get industry back). After all, how do you get re elected? By promising voters a free lunch which always requires more borrowing and spending, which he has a greater chance of getting now rather than later if he waits too long.

  9. Hi Steve,
    There is a problem when I access the home page, I get this . . .
    https://srsroccoreport.com/cgi-sys/defaultwebpage.cgi
    Regards
    R.Marsh

    • R.Marsh,

      You may have to clear your browsing cache. Also, it does take between 24-48 hours to be propagated across the entire world. But, it seems to be working for most. Let me know if you still have the same problem in another 24 hours.

      steve

  10. Love the new site! March 15th should be an interesting day you have yellen on deck plus the debt ceiling. Predictions anyone??

  11. Steve, love the new site.

    I agree there really are no more markets, just manipulations, thus trying to explain or predict any stock market drop or rally depends on what the manipulators are doing. While Silver and Gold may be undervalued on sound technical anaylsis, the problem is that if investors are drawn to the stock market like moths to the flame, they are NOT going to be driving the PM prices up in the paper market. I am sure all readers here agree on this aspect of the fake ETFs.

    I am beginning to backtrack a bit on the demand for physical silver which in theory enjoys more price support than gold because of silver’s industrial demand. If we are getting world wide economy demand destruction, driven by either decreasing EROEI in oil (Hills Group theory), or plain old fashioned demand destruction, then almost half of silver’s support may be in question. Meanwhile, even though Silver has been facing an increasing demand as an investor/monetary metal to the point of offsetting any potential decrease in industrial demand, as long as people are playing into the paper Ponzi fiat games by central banks (A sort of Nash equilibrium game theory) and chasing the stock market, even as money exits bonds looking for yield, then the theoretical moonshot in silver price may take longer than we anticipate. In fact, we could see a moonshot in the stock market first. Again, it is less and less about fundamentals, traditional economic theory, or historical equity market behavior. It is about pyschology and manipulation. Very difficult to make any predictions based on this.

    • “silver’s industrial demand”

      unless you deal in silver by the ton, you’ll never access any industrial price for silver.

      “the theoretical moonshot in silver price”

      don’t you mean the cratering in the value of the dollar?

  12. What’s wrong with Euan Mearns? He sees no problems in shale profits.

    http://euanmearns.com/peak-oil-exports/

    http://peakoilbarrel.com/wp-content/uploads/2017/02/blog170209e.gif

    Site is fast, but i cannot reply to comments. Fresh looking website.

    • houtskool,

      You should be able to reply to your own comments. However, after 5 replied comments, no more comments are allowed.

      As for Euan Mearns notion that shale will make the U.S. energy independent is quite surprising coming from someone who should know better. Even though the Permian is showing a good amount of increased oil production, the Bakken & Eagle Ford haven’t increased all that much.

      steve

  13. W Bishop Jordan | March 10, 2017 at 12:32 pm | Reply

    Hi Steve
    Zero had a clip that Trump would like to see Glass Stegal reborn. If that would preclude banks from trading commodities then they would have to close their gold and silver COMEX positions. What effect would that have on the markets. See bank participation report Thanks Bishop

  14. Hubbs,

    I wouldn’t be too concern about the timing of when metals will do their moonshot. Just be prepared before it happens, because it will most likely happen violently.

  15. You fail to illustrate the total global demand and consumption of oil versus silver, which is just disingenuous. Without this comparison the analysis you present is flawed. Not saying that silver is undervalued, but you seem to be talking your book and not presenting all the information necessary for an unbiased analysis.

    • william,

      I didn’t need to. The point of the argument was not to compare total value of oil-silver or how much of each is being produced. Rather the point I was trying to make was to show that ExxonMobil supplies 2.5% of total global liquid production, while the top 10 silver miners supply 18%. If ExxonMobil’s oil production was lost, it would have less of an impact on global oil production that the top 10 primary silver miners.

      steve

  16. There is no substance in this analysis
    There is no point in comparing Exxon with the top 10 silver companies

  17. Hi Steve, reply function is not available for me. Netherlands, iOS.

  18. commentar #131263

    Total silver production

    http://www.ariva.de/forum/silver-407209?search=goldglied

  19. What happens when technology makes energy almost free and robots have developed to the point where they maintain themselves?

    At this point the cost to mine gold and silver goes almost to zero even in very low quality ore.

    I see the price of silver and gold staying about where it is indefinitely.

    • DisappearingCulture | March 11, 2017 at 11:13 am | Reply

      “What happens when technology makes energy almost free…”

      You must be new to this site. That is not going to happen unless you are aware of some cold fusion breakthrough that scientists & mathematicians are not aware of

  20. Hey Steve
    It’s fast and great impovement when reading.

  21. China’s debt/underlying gdp ratio reaches 500% by 2020. First pdf from Tim Morgan’s surplus energy economics data system.

    https://surplusenergyeconomics.files.wordpress.com/2017/03/china-pdf.pdf

    Underlying gdp is real gdp without the debt fueled spending spree that keeps the world turning. Absolutely crazy.

  22. Wow, and this mises only compares to an energy co. something that does have value to a production economy.
    Think of the potential when funds start leaving things like facelook, twitchat, or snappertweet. IMO these actually produce nothing, they have no value.
    When the investing public realizes the emperor stockmkt has no clothes, they will seek real stores of wealth.

  23. “Because there are so few primary silver miners, any significant amount of funds moving into this sector could reach insane levels never imagined today.”

    nice analysis, really. but what you’re missing is that if those stocks are reaching insane levels it’s because the rest of the system is crashing, and not just for a weekend but long-term. you may “make” millions of digital dollars, but those digits will no longer mean anything.

    heh. and if one discounts worst-case, there are also issues like stock splits, nationalizations, windfall profit taxes, or dividend embargos. “just until the emergency is over”, of course ….

  24. InstitutionAl investors are moving in Altcoins and Bitcoin. Sorry

  25. I thought institutional investors have already moved in which is why we are at high historical price levels now. But, equities are in cheaper dollars, that’s hidden inflation, au/ag are now part of most people’s diverse investment portfolio to help spread risk which is obviously historically high. The last hard recession people were selling everything, deepest job cuts ever, if that happens again I see silver as being a bargain due to way to much many years of over speculation, investing and hoarding of metal, or maybe many countries will need stockpiles for collateral in hard times. Maybe the ETF will drive it up again by soaking up physical, maybe inflationary pressures (worldwide), will contribute. I still think the next significant up cycle in silver is long out from now which will happen when the industrial or steam revolution has gone it’s course and the green revolution has a burst of momentum, not holding my breath on that one though as humanity which is totally lol, stuck in the archaic every man for himself way of thinking.

Leave a comment

Your email address will not be published.


*