Hard to know at the moment. Prices are being hammered down this morning as the CME hiked COMEX margin requirements by 18%.
But according to this interview last night with Robert Mish, an independent precious metals dealer with nearly 60 years of experience in the industry, inventories have been overwhelmed by the wave of retail buyers making purchases over the past few days.
As a result, the price of physical silver is currently MUCH higher than paper silver.
If this buying pressure continues, he sees the price of paper silver being pushed up into the $35-50/oz range in the near term. But that’s only if the army of retail buyers keeps at it.
How will we know if the #silversqueeze army is successful in creating a true silver shortage?
Robert shares his war stories from previous panics in the '60, '70s and 1980 to give us a sense of what one will look like if it indeed happens:
I have only watched a few minutes of this so far. I would like to correct one term.This is not a panic in Silver, nor a squeeze, this is the logical FAILURE of a corrupt system to control prices ILLEGALLY using the futures market - through infinite paper supply - ie you can sell short silver that you don’t have ad infinitum - but you had better have powerful friends in high places and deep pockets. When you can not source real physical silver yet the futures prices decline 8+ percent February 2nd - this does not happen in the real world of commodities.
What we are witnessing is the breakdown of the Comex futures market - and dare I say the complete breakdown of other related futures markets - please remember that the size of the futures markets DWARF the size of the real markets - so when they break - That’s All Folks.
It appears that there’s Ag available in Canada on the retail level with low premiums. I’m not getting excited yet. Retail investors buying coins won’t break the market.
vbce.ca
I remember one time when gold went up quite a bit one of Canada’s papers had a headline like: “Investing in Gold? Putin thanks you”.
Was all about how gold investors are enriching the worlds greatest monster. This is something anyone investing “against the house” needs to be aware of. You will be ridiculed as an astonishing moron until you start winning at which point you will be vicious and despicable.
dehumanizing is the first step
In 1974 the mechanism of pricing gold/silver changed to the derivatives (futures) market. The intent was to purposely deter physical purchases. Since 1980 demand for the PMs has been met by ever increasing paper claims for the metals. The expanding paper claims has greatly limited prices. This is the main area of the manipulation of the prices for the metals. No one knows what the ratio of paper claims to physical metal is, but consensus estimates are > 75-100:1. Of note, the derivative price on a highly leveraged asset can go down near $0 while the physical asset goes no offer. It can be counterintuitive. Don’t ever be fooled into thinking the current metals market functions off of supply & demand, it’s anything but. The current pricing scheme will only be broken if: 1) the COMEX or LBMA can not meet the demands from futures traders who stand for physical delivery, 2) the US decides to change the current structure of the USD (as suppressing PM prices is fundamental to the Petrodollar after leaving the gold standard in 1971), or 3) the rest of the world…China/Russia/Saudi Arabia/other oil exporters/G20 revalues gold one day. The BIS Basel 3 rule changes included moving gold to a tier 1 asset on par with treasuries from a tier 3 asset. The Bank of International Settlements is the central bank for all the central banks of the world. This was first officially proposed in 2014, accepted in 2019, and I believe it will be officially implemented January 2022 but the date keeps changing. It should be noted the Central Banks gold holdings are at all-time highs as are Russia’s & China’s. The rest of the world is also rapidly de-dollarizing. Basel 3 changes also included increasing allocated gold requirements for the bullion banks, something the LBMA is not happy about. These rules takes effect at the end of June 2021. One would think this rule should cause some tightness in the physical markets, but that’s unclear IMO. Any type of gold revaluation would likely occur over a weekend not unlike President Nixon announcing the US was going off the gold standard in 1971, or something like a Plaza Accord 2.0. IMO it is highly unlikely there will ever be a gold standard again, but gold could very much play a role in a SDR or as a neutral reserve asset to balance any trade imbalances.
I speak of mainly gold in the aforementioned, but so goes gold pricing silver pricing roughly follows.
You argue lots of very good points.
I don’t know if the current movement of buying physical precious metals will put the banks in difficulty.
What I do follow (as in watch) is the relationship between stocks and gold; stocks and silver. Since December 4th 2017 gold has kept pace with the gains in stocks to this day - same thing with silver. So WSB (WallStreetBets) or not - TPTB can not seem AT THIS POINT IN TIME to alter this relationship in any significant way. If anything, following the news, you could say that buying precious metals is “In the news”. Can TPTB keep pumping out enough Dollars to keep stocks from back-tracking? Don’t know.
But the prospect of physical pricing in precious metals being broken from the imposed futures pricing of precious metals is palpable for those like me who have been patiently waiting for this “moment”. The arbitrage function between the physical market and the futures market is in difficulty. Arbitrage being the function of market makers to “turn” a profit from market discrepancies selling in one market buying in the other - this is most commonly is done in conjunction with an options trade - netting out for zero risk (but yes counterparty risk) yielding “an interest rate return”. This was called a Conversion. Breaking the market would happen when arbitrage no longer is worth the risk. Mr Mish talks about this in the end of the podcast - that he would buy for delivery - trouble is delivery LBMA is becoming more and more complicated. Wait and See (like we say here in France).
Silver will NOT be allowed to go up, and everything that can be done to suppress prices will be done. This game is owned and operated by some Big Time monsters so try and keep everything in balance Folks. I am happy for those though that have increased your wealth however. Bitcoin as an idea is the way to go. I have no real clue still how it works and haven’t since Jim H. first brought it to our attention when it was like $17 dollars a share!!! but, it has caught a bid that’s for sure and people are rich for owning it. I believe it is headed higher, much higher, an order of magnitude but I honestly don’t get it still. Peace BOB
I agree that until the money system is changed, internally or externally, the US gov will fight true price discovery of the PMs with everything they have. As the nuclear core (US debt market) of the financial system melts down people are trying to find any lifeboat they can to escape. Foreigners have largely funded treasuries for the past 50 years but this past year, facilitated by Covid, the buyers have vanished. Thus, the Fed/Treasury is doing all they can to try and herd capital into treasuries. Long duration assets without counterparty risks (BTC, gold, silver) are now a huge threat to what was recently considered the safest & most liquid asset class in the world: the US debt market. That $37T market is rapidly being revealed for what it is.
The current predicament with the current money system is that Russia & China have now weaponized the USD back towards the US. They are taking printed USDs & gobbling up tangible real commodities along with making major investments around the world.
I have been studying the “Modern Monetary Theory” and many top economists have been harking this theory in government and a new way of thinking has taken shape. I am not qualified to speak of it yet but, it intrigues the hell out of me. If it takes hold everything we thought before will change and we with it. Peace
Interesting and small discussion going on here. I’ve been a silver bug for 12 years, and it’s a lonely road no doubt. It certainly is important for the government to keep PM prices in check do to trust. At this point our monetary system is a trust based system backed by our military in my opinion. In a country nearing 28 trillion in debt, an 8 trillion dollar FED balance sheet, and a future with mass unemployment and endless money printing, the trust boat starts leaking at some point. Is this move in silver that crack? Hard to say right now, but I know thousands if not millions of people have learned more about fiat money and real money in just the last week. I have several eggs in the silver basket and generally see it as something I hold with a potential to greatly surpass inflation. Crypto the last few months has made my PM’s look like dinosaurs. I’m not sure where those are headed truly, but glad I finally jumped on the train last year. The spread between paper price and physical in paper is what tells the story for me. $7 to $13 per oz premium over spot on rounds to Eagles. Pretty sure that was $1 to about $5 when I first started buying. If consumer inflation takes off, physical silver could do extremely well. I’m not letting mine go at prices anywhere close to here. Will the new buyers have diamond hands? That is the question.
Like Montana Native, I have been into Silver since the GFC, i.e. about 12 years. I have no intention of selling anything until and unless I think that the price is truly reflective of a balance between physical supply and physical demand, i.e. a normal functioning market. It is nothing of the sort today.
There is still some chance that physical supply shortages rippling through the supply chain now will fester into something more dramatic. I noticed for instance that Texas Metals had some (relatively) low premium mixed 100 oz. bars in stock last night at about a $4 premium… now gone again; I also saw this which might indicate there is stress remaining out there in Silverland?
Update: 100 oz bars with $4 premium back in stock at Texas PM’s…
Greg Mannarino knows.
Also, big bond auctions next week & higher yields attract more buyers. Would not be surprised in the least bit if there was a big metals smash in the futures market between now & next week. I’m not giving any trading advice & I’m not trading any of this. Just interesting.
We are long time PM holders. The somewhat organized effort to help silver break its chains was quickly and predictably extinguished (with more pain to come if JPM has anything to do with it) and with it the nascent spark of excitement I had. When I listened to this podcast the words “hope” and “maybe” and “could” translated to my ears into - “don’t hold your breath”. That and recent events have, after all these many years of putting disappointment behind each time silver got slammed, finally destroyed the remnants of optimism I had left about them. I’m glad to have this community and hope you don’t mind that I take some shelter here to vent a little.
^ Haha, well I did worse. My worst ever transaction was buying a bunch of silver near the ATH for crypto when it was cheap… Would you like some silver at 1000x loss?
If you have no crypto though, why not sell half of the dead weight metal?
For silver to go yp a lot doe#n’t there have to be a shortage?
This may seem a trick qiestion but I don’t mean it that way. I just don’t think that there is any shortage of silver. Best to all!
I also saw this which might indicate there is stress remaining out there in Silverland?
