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Thread: Silver supply deficit

  1. #1

    Default Silver supply deficit

    https://www.kitco.com/news/2023-04-1...te-report.html

    Quoted from the article:
    The report showed that industrial demand continues to dominate the marketplace, even if investor interest drives prices.
    What complete nonsense, investor demand has little to no bearing on the price of silver.
    "That's not money" - Ben Bernanke

  2. #2

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    This is illustrated perfectly by the *failed bid of the hunt brothers to "corner" the silver market. Investors do not consume silver in industry. Coins and investment grade bars are fabricated from the same mine supply as other this like solar cells. The difference of course being that industry consumes the silver; investment only changes the shape and size for storage purposes. Of course a premium attached to certain select items can create the illusion of a higher silver price. But it is always listed as spot + x$ amount.
    Considering silver's monetary role also does not affect the price as there is zero change in supply (only the shape and size has changed) Should fabrication and industry demand raise the price, investment grade silver can be sold to market along with mine supply (which is a much larger percentage) As fabrication and industry demand slow, the price goes down and less consumed to end use.

    If you want to move the price of bullion, do gold.
    Last edited by and4rik; 04-20-2023 at 05:11 PM.
    "That's not money" - Ben Bernanke

  3. #3

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    Quote Originally Posted by and4rik View Post
    This is illustrated perfectly by the *failed bid of the hunt brothers to "corner" the silver market. ...
    The Hunt brothers failed because the rules of the game were changed when they were in mid play.
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - https://www.nbcnews.com/id/wbna22592939. The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  4. #4

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    Gold also reached new highs at the same time as silver in 1980. Who was trying to corner the gold market?
    The Hunts held most if not all of that silver out on margin and the rules were actually changed on all commodities, Gold fell at the same time as silver. It is worth noting that inflation in 1980 was hot at 14.5% and fed interest rates were around 19%.
    According to the Silver institute, mine output was actually lower in 1980 compared to previous years.
    Last edited by and4rik; 04-21-2023 at 12:45 AM.
    "That's not money" - Ben Bernanke

  5. #5

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    Quote Originally Posted by and4rik View Post
    What complete nonsense, investor demand has little to no bearing on the price of silver.
    It actually works like that to an extent. Investment silver is about a quarter of the silver utilization and is pretty much Ion a separate track. On the demand side investors and stackers could not care less about any form of silver that was not a pretty round or bar; those run out and you don't see them buying sterling and shot. On the supply side the industry adheres to just in time production in order to avoid getting stuck with a very expensive inventory that may drop in price. So even if demand is strong supply is squeamish to ramp up production too much. The result is a disconnect between silver prices and premiums. I have seen premiums both high and low under both high and low spot prices.

    The hunt brothers attempted to corner the entire silver market, not just the pretty investment silver market. The other silver bubble was such a sustained demand for investment silver that as bubbles are wont to do it got out of hand, diverting silver usually used on other sectors.

  6. #6

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    The way I see it silver does its moves about as fast as a glacier moves. In 1964 Ag was worth more than the face value of US 90% silver coins. Today, a dollar face value of those coins are worth about 18 times face. So a good move, but a slow one. Inflation is no doubt about the same overall. So you aren't gaining anything if you are looking for a home run investment. But if you are looking to put some wealth into an inflation resistant device, then IMHO Ag has done well for me. Yes, you can claim to time the peaks and dips and "make a fortune" just like everyone that goes to Vegas always claims to come home a winner. But I see most people buying on the top and selling on the bottom and then moaning about how silver sucks.
    Do your own due diligence

    I stand united with my friends & family in Canada who seek freedom.

  7. #7

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    It actually works like that to an extent.
    Basically the point I am trying to make, I suppose had the Hunts managed a 80-90% store of "sidelined" silver and also been able to keep the US military away.... anyways. I do believe much 90% and 40% was melted in 1980 due to exaggerated fears of silver locked in a warehouse. Did the Hunt brothers have a sell price in mind? 100$? 200$?? How would that work, sell it all to a rich prince in a far away land?? Tiffany actually took out a full page New york times ad complaining about these antics, as if...
    "That's not money" - Ben Bernanke

  8. #8

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    Never forget that the Hunt brother's house of cards came crashing down for a very simple reason; they were cornering the market by buying on margin. They bought silver on credit, and used the value of the silver to secure more credit to buy more silver. On January 7 1980 the scheme/scam came crashing down when COMEX limited how much margin you could leverage, which lowered the price of silver, which presented the Hunt brothers with the first margin call at $100m and the certainty of more to come.

  9. #9

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    Seems pretty straight forward. The Hunts moved several large hoards of silver to one location, but the economy had no real demand and the inflated price crashed as quickly as it rose. Same amount of silver before and after. This gets partly what I am trying to better understand: a given amount of silver is mined which is supply and industry demand for real non monetary use case, things like wire, PV cells, electrical contacts, research, even the CERN particle collider all use a certain amount. Everything left over just floats and is left in coin or bar form. No change to the supply side from silver in storage in coin or bar form.
    "That's not money" - Ben Bernanke

  10. #10

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    How does this differ from gold? Miners dig it up, it get processed into bars and then sit in a vault for decades and decades. It's not even moved when sold, but just a computer blip that the new owner now owns bar number xyz123 in vault abc789.
    Do your own due diligence

    I stand united with my friends & family in Canada who seek freedom.

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