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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (168254)	2/9/2021 1:14:03 AM
From: sense	Respond to of 219671

There are a couple of major changes happening right now that will alter the future dynamics of silver prices in the market... Now I'm ignoring the "technical" in the monetary elements... and just focusing on the technical uses... on the technology applied now in extracting silver from the rocks... and on the monetary element as a function of culture. First item to note is that the end of photographic uses caused a huge glut in silver, and a price collapse... which uses in electronics have slowly absorbed. In 2019-2020 we were just on the cusp of silver finally being forced to be recognized as in deficit once again... by the combination of the huge "overhang" in supply finally being consumed... at the same time that global growth in electronics seemed set to drive consumption steadily higher. Queue the virus and the implosion of demand for electronics... with the impossibility of sustaining mining operations or starting new ones... along with the growth of monetary demand causing a price spike for reasons having nothing at all to do with the long term balances in supply vs demand... but only the short term impacts of economic disruptions. The market noise has drowned out the long term drivers... but economic recovery will re-establish those drivers in parallel with the pace in the economy... and electronics haven't actually been hurt as bad as other things... so, the market will be resuming from a higher base than in some other markets ? Silver, generally, is at the bottom of a long term decline relative to its former role in the economy... which was caused by the loss of the market in photographic uses... which portion of consumption has now been entirely replaced by demand in electronics... so growth in silver demand for industrial uses resumes now, from a near zero stockpile... after a hiatus of roughly 30 years. Second item to note... is the ongoing shift in growth in the global economy away from mature economies to emerging economies. That matters because new consumers are being minted in other cultures... and wealth is being grown in other cultures... so, not only is there new demand by growth in electronics in emerging markets, there is new demand for a store of value that works in context of newly wealthy emerging markets. Reality is that both China and India are growing towards having a middle class with comparable wages and wealth as other nations... if not yet there... certainly a lot has changed in 20 or 30 years. That matters in silver even more than gold, because both India and China have a lot of people... and they both have cultures that are inherently far more predisposed to storing wealth in the form of precious metals... with a long history of valuing silver for that purpose. The bankers suppression of value perception in the west hasn't had impact there... and isn't likely to... given the differences in the cultures. As a percentage of the growth issue, and a percentage of global wealth issue... paired with huge population differentials... the growth of wealth in China and India is going to dramatically alter the bias in the global markets toward favoring silver in particular as a "store of wealth"... which occurrence will also likely re-enable western perception of that value... only as the price shift occurring forces that revaluation. Cultural values and consumers choices tied to them... does matter in markets. That's probably why JPM has altered their market posture re silver ? Third item to note... that might be the most important in the short term... is that the technology of separations in mining base metals like copper zinc and lead has changed. More than half... 72%... of silver production comes as a byproduct of mining copper, lead and zinc. Separating the silver from those other metals made sense when using older technologies. But, a newer technology being used now, electrowinning, doesn't have that as a requirement. Since the silver isn't really a problem if it is just left in the other metals in a small percent as an "impurity"... that's what they're doing now. That makes sense because electrowinning is so much more energy efficient that they're saving a lot of money on energy costs by not removing the silver... and its just no longer cost effective to bother to remove it. The adoption curve on the new technology will matter... and ores are complex, so it won't eliminate all silver separations from all ores that have silver in them... but, the silver market is TINY compared to others... so the impact of losing a huge portion of the future supply due to the change in separations technology is likely to be magnified... We don't see that impact mattering much yet... in part because the economic impacts of the virus have slowed down "change" in mining in almost every aspect... not just in reducing production temporarily... but in slowing the rate of change in established mines more than the short term production. As the economy recovers... more as we see a boom in the commodities... the pace of technological adoption will accelerate... and silver production will decline almost linearly with that change. Meld all those things together... acceleration into a growing market in electronics, the evaporation of a decades long overhang in a surplus in supply, a changing global cultural bias shifting to favor silver as a store of value (even without re-monetizing it at all), a change in separations technology reducing the future supply... and a "black swan event" in the market situation that has operated to help mask all of those converging elements from emerging into market awareness... for a couple of years now ? Clocks are ticking. Silver is well poised to explode higher at some point soon... without considering the monetary aspects at all... based only on a forced market recognition of the changed dynamic in supply and demand for silver seen as as an industrial commodity: demand growing and supply in decline. My guess is... given that industrial commodity focus... you won't see any big moves occur relative to other commodities... until after the economic drivers do begin forcing the market into an awareness of the changed reality in the supply overhang being gone... and in the future supply reductions being permanent. So, I don't expect it will happen without first seeing a global economic recovery sufficient to drive electronics market demand back to 2019 levels... at which point the supply imbalances will likely start to become increasingly apparent. For the reasons above, I think it will begin to make more sense soon to shift focus in the evaluation of silver prices away from the silver gold ratio... to the silver oil ratio... macrotrends.net Both are economically sensitive similarly in relation to improving industrial demand growing in the face of lesser supply over time... but I think oil supply will prove a lot more fungible or elastic in the future than silver supply can. But, as is also true of oil, there isn't any real problem developing large new supplies of silver... there is only a problem developing large new supply at low cost, as when prices are being held below a certain threshold. The majority of silver production now occurring as byproduct has meant silver has been essentially "free"... and as that can't and won't continue... prices will have to rise to at least reflect the actual costs of mining it... plus a return sufficient to make mining it a viable business based on real profits, rather than using black hole investment schemes as sinks to run mines by serially robbing the investors. Also like oil... that means there's going to be a huge price squeeze occurring in the next few years... because the market can be forced to recognize the fact of (a surplus or) shortages developing a lot faster than it can (turn off or) create new supply from future investment that hasn't occurred yet... and that at best takes years to organize and convert into a meaningful volume of production. Peak silver is quickly going to become a much more relevant issue than peak oil... and then prices will adjust to reduced supply... and production will grow to meet demand at the higher price... and in time market balance will be restored at some higher price. But, while I've tried to ignore it here... I don't think that change will occur in a silver market that can ignore monetary values... I think it isn't impossible for silver to reach $1000 an ounce in a "monetary reset" scenario... but I'm not betting on that happening this month. But I also don't think its possible for silver to remain under $60 very long... just based on market fundamentals... and I've never yet seen any market (GME anyone ?) that corrected to a new higher price point without over-shooting by half or more... so call the upside $90 to $120... IF AND AS the supply contraction proceeds as slowly as I expect it will... in a market context in which silver really does have both industrial and monetary value. As is true in oil now... the best leverage in future share price growth... will occur in companies whose costs of production are currently "just" above a level that justifies ever putting them into production. When prices do rise above that level... the value of zero potential profit suddenly shifts into nicely positive numbers... and share prices will quickly reflect that changed value by awarding it a nice multiple... just as other "out of the money options" are suddenly repriced as in the money with leverage when prices do suddenly rise...