Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The AI Stocks Megatrend Big Picture - 8th Mar 21
The Future of FINRA, Regulatory Defense and Bad Stockbrokers - 8th Mar 21
Almost Everyone Is Online: But Most of the Money Isn’t - 8th Mar 21
It is Time for Stock Market Investor Caution? - 8th Mar 21
Gold Predictive Modeling Suggests A New Rally Targeting $2300+, But When Will it Start? - 8th Mar 21
Gold: Crisis or Opportunity? - 8th Mar 21
US Bitter Cold Snap is a sign of the times - 8th Mar 21
How Scan Computers Builds Your Custom Built PC - Scan.co.uk Review (2) - 8th Mar 21
US Economy, GDP, Unemployment, Inflation Impact on House Prices Trend 2021 - 8th Mar 21
BACK TO SCHOOL - UK Coronavirus Lockdown Ending - Summer Holidays & Booming Economy Ahead - 8th Mar 21
So, Where Is Gold's Corrective Upswing? - 7th Mar 21
US Treasury Yields Rally May Trigger Stock Market Crazy Ivan Event - 7th Mar 21
The Great Reset Is Coming for the Currency - 7th Mar 21
Gold Continues Declines on Bond Yield Jitters - 7th Mar 21
The Case for Inflation - 7th Mar 21
Dow Short-term Stock Market Trend Analysis - 6th Mar 21
Intel Rocket Lake EXPLODE on Launch - 11th Gen CPU's RUN VERY HOT Bad Cinebench R20 Scores - 6th Mar 21
US & UK Head for Post Coronavirus Pandemic Lockdown Inflationary Economic BOOM - 6th Mar 21
FED Balance Sheet Current State - 5th Mar 21
The Global Vaccine Race Against Time and Variants - 5th Mar 21
US Treasury Yields Rally May Trigger A Crazy Ivan Event (Again) In Stock Market - 5th Mar 21
After Gold’s Slide, What Happens to Miners? - 5th Mar 21
Racism Pandemic Why UK Black and Asians NOT Getting Vaccinated - NHS Covid-19 BAME - 5th Mar 21
Get Ready for Inflation Mega-trend to Surge 2021 - 4th Mar 21
Stocks, Gold – Rebound or Dead Cat Bounce? - 4th Mar 21
The Top Technologies That Are Transforming the Casino Industry - 4th Mar 21
How to Get RICH Crypto Mining Bitcoin, Ethereum With NiceHash - 4th Mar 21
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

MainStreetBets on Silver and Wins

Commodities / Gold and Silver 2021 Feb 07, 2021 - 09:17 AM GMT

By: The_Gold_Report

Commodities

Peter Krauth, editor of Silver Stock Investor, explains why he believes silver's movements this past week were just a small taste of its opening act.

TEMPORARILY OUT OF STOCK.

That's the message most hopeful physical silver buyers have been getting since the last days of January. Odds are bullion dealers going to have a tough time keeping any silver in stock.

Everyone is buying, and no one is selling the physical metal. Dealers are asking for 35% premiums…and that's if you can get your hands on any silver at all.

And yet I remember well, less than a year ago in mid-March, when the world started a major lockdown in response to the Covid-19 pandemic. Gold and silver bullion dealers were nearly completely sold out within days. In some cases, silver premiums reached historic highs, near 100% of spot prices.


In the recent #silversqueeze hype, silver traded at an 8-year high, as demand was exploding. Silver's given back $2 since its $29 peak on Feb. 1. But it's still up 20% since late November, and has gained 125% since its March lows.

And silver stocks have been surging. It's all related to the now infamous WallStreetBets calls to action, the latest of which targeted silver. It was enough to cause the Comex to raise silver margins by 18% after just two up days.

But silver's story is still in its early days. Dramatically higher silver prices are still squarely ahead.

Here's What Really Happened to Silver

A Reddit subgroup called WallStreetBets sent out a call-to-action to buy silver on January 28. Retail investors piled in en masse and kept doing so on Friday, Jan. 29 and Monday, Feb. 1. By Sunday, January 31, most bullion dealers were outright sold out. By Monday, February 1, silver was up nearly 8% from the Friday close.

Silver had gained almost 20% in just three trading days.

Silver had soared to an 8-year high. Silver stocks were ripping higher, and many were seeing their trading volumes explode anywhere from 6-10 times normal levels.

The Global X Silver Miners ETF (NYSE:SIL) went from $40 to $49 in just three days. The ETFMG Prime Junior Silver Miners ETF (NYSE:SILJ) went from $13.60 to $17.80 in that same time.

On Friday alone (Jan. 29), the iShares Silver Trust (NYSE:SLV), the world's largest silver-backed exchange traded fund, added nearly $1 billion of inflows.

Some of this move will turn out to be a short-term speculative buying frenzy. But what this whole saga has done is to introduce a massive new following to the silver space.

More importantly, I believe silver still remains fundamentally cheap.

Silver Supply and Demand Drivers

Huge forces are going to keep pushing silver higher for years to come.

Supply has been falling consistently for the last five years.

Not one of the top 10 silver producing countries has escaped this trend. Several consecutive years of low prices have led to underinvestment and underexploration. Output has dropped along with reserves.

And with 70% of mined silver is a by-product of mining other metals, those miners are not motivated to produce more even when silver rises: it's too small a portion of their revenues.

All this is happening while multiple demand forces are building.

Vehicle demand for silver is soaring. Whereas internal combustion engines need 15–28 grams of silver, EVs need double that amount at 25–50 grams per vehicle. Globally, EV sales are projected rise dramatically. The Silver Institute projects a 50% rise in automotive silver demand, from 60M oz currently to over 90M oz in just five years.

Meanwhile, the solar sector is also likely to boost silver demand. It currently represents 100M oz of silver annually. And although efficiencies have been leading to lower silver consumption per solar panel, in my view expanding volumes will more than make up for that.

However, I believe the wild card will be investment demand for silver. Even without the dramatic, explosive action in silver markets over the last week, investment demand has been gradually increasing over the last five years. 2019 saw an impressive increase of 12% over 2018. But 2020 was an absolute standout, with a 16% increase over 2019. None of this happened with any hype.

That translates into global silver ETF holdings now in the 1 billion ounce range.

Consider that these total holdings are the equivalent of a whole year's silver supply: mine production and recycling.

And yet silver remains stunningly cheap, especially relative to gold.

The gold-silver ratio has reversed in a dramatic way from its all-time high last March at 125, and has just broken below support at 70. I believe it's heading towards 55 or even 50. Silver remains cheap on a fundamental basis, a relative basis and an historical basis.

In the Silver Stock Investor newsletter, I provide my outlook on which silver stocks offer the best prospects as this bull market progresses. I recently added three companies to the portfolio, which I believe have exceptional potential to double or better in the next 12 months.

In the end, this pullback is just par for the course, especially in silver. The way I see it, all it does is give us more time and another opportunity to keep accumulating silver and silver miners at discount prices.

The mania stage still lies ahead. This past week was just a small taste of the opening act.

Stay long silver.

--Peter Krauth

Peter Krauth is a former portfolio adviser and a 20-year veteran of the resource market, with special expertise in precious metals, mining and energy stocks. He is editor of two newsletters to help investors profit from metal market opportunities: Silver Stock Investor, www.silverstockinvestor.com and Gold Resource Investor, www.goldresourceinvestor.com. In those letters Peter writes about what he is buying and selling; he takes no pay from companies for coverage. Peter has contributed numerous articles to Kitco.com, BNN Bloomberg, the Financial Post, Seeking Alpha, Streetwise Reports, Investing.com, TalkMarkets and Barchart, and he holds a Master of Business Administration from McGill University.

Disclosure: 1) Peter Krauth: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules