Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
@livestock “From 1962-1968, the average penny silver stock moved upwards over 150 times in price, one went up over 1000 times due to a mere doubling of the price of silver and speculative fervor on the part of investors.”
What do you think will happen this time should silver hit $50 as most analysts and economista predict with a conservative view?
All taken from wallstreetsilver post, found it very insightful and gave me reassurance as to why I am invested here as the best silver play on aim imo (please ignore the first "part 4" post as is a duplicate. Report it to get it removed would be appreciated as to not detract from the read
Final part
Silver is a market that probably deserves more demand than it’s getting, but in reality has so little demand that the biggest funds and investors barely notice that it exists. Even this tiny demand has been enough to clean out existing stockpiles and create a shortage. The sleeping dragon in this situation is that industrial users need to buy, regardless of price or market conditions. Prices will rise, shortages will grow, and then industrial users will have to compete with a larger and larger group of investors for scarce supply.
Summary
This is a small market, with growing and inelastic demand, and an existing supply demand imbalance, that has been eroding available inventories for years. It’s currently in short supply (in an investable, deliverable form), and that shortage is getting worse by the day. The silver market is historically prone to wild spikes, and this time, a large spike up in price would actually be reverting to a more normal historical price (over the very long term), in terms of the ratio with gold, and in absolute inflation adjusted price. The physical price diverging from the paper price may force the Comex and LBMA to make more deliveries than they are basically built for, dry up any available inventory, and may cause a large number of paper contracts to owe physical metal they have no way of obtaining at anywhere near current prices.
Industrial users are the sleeping dragon in this situation, needing hundreds of millions of oz per year to operate their businesses, and historically relying on just in time inventory. Now they are being forced to wait to get inventory, and may start to see a shortage ahead. Some may decide that the risk of not getting product or having to pay much higher prices is too great, so they need to take some of the dwindling inventory for themselves. The more scarce it becomes, the more industry will want to stock up. Speculators will get wind of this, and further compete for the last scraps of bullion.
This situation looks to me like a big bonfire, soaking in the gasoline of paper leverage, that may ignite anytime. I’ll be sitting by with my marshmallows, waiting to sell into a market that might look much different than when I bought.
Part 6
Much of the developed world has forgotten about gold and silver, with academics referring to it as a barbarous relic, and with the biggest pools of money, hedge funds, pension funds, endowment funds, collectively owning less than 1% of their portfolios in gold, and presumably a fraction of that amount in silver. For individuals, the percentages are probably a bit higher than for funds, but as a share of all wealth in the west, precious metals are a rounding error, even today and even with all the attention we give to the space. It’s just not on most people’s radar yet.
Basically, we have a good case that demand should be higher, but it’s actually pretty low in the grand scheme of things, with most individuals owning none and even the biggest funds not bothering to hold any. Despite this, let’s consider how the market is holding up to this (actually very low) demand.
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r/Wallstreetsilver - My complete DD (supply and demand with charts)
I can remember a couple times when interest among retail investors spiked up, and premiums on coins and small bars went up dramatically. Every time this happened before 2020, the market would stabilize in months and premiums would fall back down. Producers of small bars and coins got a bigger incentive to make more, so they did, and the market calmed. In 2011, my local dealer would sell me high premium coins, but he could also get me 1000 oz bars at $0.60 over spot.
When covid hit, premiums rose again, but this time they stayed high. The reason is that this time the shortage is across the entire market. My local dealer passes on the prices he pays with a small markup, and his prices have stayed high on coins and bars, but also now his premiums on 1000 oz bars are up to $2.50. Shortages have reached every corner of the market, and there could soon be a time when it simply becomes unavailable.
Scarcity is an incredible driver of behaviour. There are a lot of companies who really rely on silver, and who currently use just in time inventory, so they can’t keep their operations going for long without new inventory. If I recall the toilet paper aisle in March 2020, when people start to sense a shortage, they tend to stock up. Unlike toilet paper, this won’t just be driven by fear and need. This would be driven by fear, need, want and greed. Imagine if toilet paper were a target of huge speculators that could easily and cheaply, house many years of global production, and suppliers couldn’t easily ramp up production, to respond to the shortage. It probably would have left a whole lot more desperate people, willing to pay a whole lot more.
A Veblen good is an economic term for a good where demand goes up as the price rises, and I think it may ultimately apply here for a while. Silver is far more scarce than most people realize, and as the price begins to move, people will start to actually hear the value proposition, which will drive the price higher, as more and more people enter this small ma
Part 5
The other side of silver demand is its monetary or investment demand. At the core of this demand is silver’s historical role as a store of value, as well as the investment case I’ve been spelling out in this and my last post. Silver’s monetary history revolves around it having the key properties of money: durability, portability, divisibility, fungibility, uniformity, limited supply, and acceptability. It’s worth noting that every element on the periodic table that meets these characteristics is already considered money. If you eliminate all gasses, all the elements that are reactive and non durable, all the elements that are too abundant to be portable (lead, iron, etc), the elements that aren’t easily divisible and fungible, so they can’t be divided and reformed, at the end of all that, you are left with only the precious metals. Maybe you can make the case for copper and nickel, but guess what those have been used for.
So, we’ve established that silver is a store of value based on inherent qualities. That makes it a safe haven investment, since people look to stores of value when the future becomes uncertain. For decades now, the world has been lulled into a false sense of security by the US dollar global standard, coinciding with a period of particularly low inflation. A key driver of that period of low inflation, is deflation in prices of consumer goods, because of globalization. Basically, we keep printing more and more money, but China keeps cheaply producing more and more products. This has kept inflation contained in localized asset bubbles (stocks, real estate, art), and most people haven’t seen it effect their lives much (until recently). That could change quickly. The low prices we’ve grown accustomed to, probably won’t keep dropping as we keep printing more money. In short, once China already produces everything, there’s no prices left to bring down to offset the printer.
For years, pretty much every country in the world has been printing money like crazy, and the only thing that makes it not look crazy, is the fact that everyone else is doing it, and currencies are only valued relative to other currencies. People call this the race to debase. Inflation has gone from a non issue in the minds of the world, to the issue of the day, and that’s unlikely to change any time soon.
Part 4
Today, around 60% of silver demand comes from industry, and that demand is quite inelastic. If a company makes smartphones, and the average phone uses $0.35 worth of silver, you don’t stop making phones when the price of silver quadruples, and your phone needs $1.40 worth of silver. Silver is used very broadly, since it’s found in alloys used in most electronics. Because of that broad industrial usage, and the difficulty recovering such small quantities, about 2/3 of the silver consumed is never recovered. If you have a gold watch, someday that watch will break, and the gold will probably end up in a gold bar. If you make a cell phone, one day it will break, and most will end up in a landfill. Even some of the silver that goes through a recycling process still ends up being melted into an alloy so it still isn’t recovered as silver.
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Also, industry demand is almost always hard to substitute. Silver is the most conductive element, most reflective element, and has natural anti microbial properties. These properties are elemental and irreplaceable. I’m sure if people could easily use copper instead, they probably already would have. There is a natural trend where a single product, like a solar panel, will use less silver per unit, as manufacturing becomes more and more efficient, but that effect is counteracted by more and more products using silver and higher quantities of production driving that efficiency.
Silver’s industrial demand is highest in fast growing sectors like electric vehicles, solar panels, and electronics. EV’s use significantly more silver that gas cars, and also use lots in their charging infrastructure. The average solar panel uses 0.6 oz of silver, and 5G networks are expected to increase silver demand significantly as they roll out. The trend is clear, the future needs silver, and things that haven’t been invented yet, will probably need the irreplaceable properties only silver can offer.
Part 3
Silver is found in the earths crust at about a 14/1 ratio to gold. Current mine production is about 8/1, and existing stockpiles of investment grade product are not known well enough to compare, but I’ve heard estimates ranging from 3/1 to 1/1. The current price is 68/1. Gold hit it's all time high in 2020, but silver was half it's nominal all time high, or less than a quarter of it's inflation adjusted high.
If you take a more broad view of value over time, gold and silver have historically been valued along the lines of their production and naturally occurring scarcity, from 10/1 to 15/1. This ratio held for thousands of years. If you look at an inflation adjusted chart of silver prices going back many hundreds of years, silver prices were usually many hundreds of dollars. From 1720-1900, the silver price never dipped below $100, and was as high as $500, in todays dollars. For most of the last 3000 years, an average skilled labourers days wage was 0.1 oz of silver.
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r/Wallstreetsilver - My complete DD (supply and demand with charts)
Lots of people are talking about a shortage of silver, and it’s so much bigger of a deal than most realize. Mints are admitting they can’t source material, and shortages that were once limited to small bars and coins, have spilled over into 1000 oz bars. These days, there are shortages developing in so many things, so it’s seems normal, but this shortage is nothing like the others. As I said at the beginning, if most other shortages are self correcting by the functioning of the markets (planting more corn, etc), but this market is valued based on a stockpile built over 3000 years, then a shortage means we’ve run out of the stockpiles, and the one and only thing that can correct the supply, is higher prices. Given what we saw in 2011, with very little new silver coming back into the market at $50 (or an average though the year in the mid 30’s), it’s safe to conclude that the price it would take to truly balance the market, with no more stack to erode, would have to be dramatically higher than that.
Demand
The most important thing to understand about the demand side of the silver equation, is how it’s changed over time. For thousands of years, silver was money. Before the last 150 years, pretty much all the silver ever discovered was still around, and the demand was that it became money the moment it was found. That’s a pretty simple demand case. If you were a prospector in the 1700’s, you could walk into a bar and spend silver or gold you found that day. If you spun some wool, you’d have to trade that for silver or gold before you could spend it.
Then, over time, more and more uses for silver started to appear. This is when silver gained its hybrid, monetary and industrial status, and this status is really key to understanding silver in the world today.
Part 2
Never forget that every oz of silver in the world is already owned by someone. When people talk about “new” supply coming on the market, that has to be someone who wasn’t willing to sell at the old price but is willing to sell at the new price.
Although there has been much more silver mined through history, silver inventories have been chipped away for decades by industrial consumption, while gold inventories have grown. Don’t forget that although gold has grown, so has the human population, and especially the population those with enough wealth to own gold or silver.
The whole mining industry has been slumping for a very long time. Discoveries of new significant deposits are not only down, but new additions to PM reserves fail to add as many oz as are produced each year. If you consider that it takes years between exploring, drilling, permitting, more drilling, and construction of a new mine, there could be a very big lag between the price going up, and any significant new supply entering the market.
Some people say that if the price goes up any significant amount, a flood of silver will come in from old coins, silverware, jewelry, etc, and correct the problem. In 2011, when silver hit $50/oz, the amount of silver recycled, went up about 50%, from around 100M oz to 150M oz, but that increase was only a small fraction of the mine supply (over 800M oz), so the broader supply demand picture didn’t really change much. There’s still a huge amount of silver in coins, silverware, jewelry, etc, but if it didn’t come back into the market at $50 in 2011, why would it come out of hiding now, for less? Also, although there are still lots of old silver teapots and spoons, they don’t make a lot of new silverware and every year that stockpile shrinks as old spoons get melted down. Much of the silver used in the “silverware” portion of the current demand pie, is used for electroplating, and that silver is never getting recycled.
Over the past several decades, some of the supply demand imbalance in the silver market has come from governments eroding their silver stockpiles. Many countries used to make coinage from silver, so they had to keep stockpiles, both functionally for making more coins, but also as a strategic and central bank asset. Today, the US, Canada, UK, and most other developed countries, have sold the majority of their silver reserves decades ago. The US government had 350M oz in 1970, and around 50M oz from 2006 to today.
Part 1.
Supply
Sorry this is a bit long winded, but I wanted to put out my entire investment case for silver, maybe just to feel better about having invested most of my life savings into it. This is just my opinion. Do you own research, since I’m not qualified or interested in, giving investment advice.
First, it’s important to consider that silver is not like other commodities. It sounds kind of silly, but if we were talking about wheat, oil or pork bellies, the supply and demand would have to match, in the long term and the short term. Gold and silver are mostly valued based on existing stockpiles. They have been mined for thousands of years, and for most of that time, excluding the last 150 or so years, almost everything ever mined was still in some sort of usable form. This is why these metals can act differently than almost other commodities. If the price of corn spiked higher, farmers would switch crops to farm more, and it would eventually correct the price to the cost of production and a reasonable profit margin. Gold or silver could go for a long time being too expensive or too cheap, and it wouldn't immediately correct itself, since the price is based more on the huge stack already mined, rather than just what's going to be mined in the next year. This one frame shift is really key to understanding the current state of the market.
Silver is primarily mined as a byproduct of Copper Lead, Zinc, and Gold mines. This may seem like a random interesting fact, but it actually effects the market a whole lot. If we were talking about lithium instead of silver, and the lithium price went up 5x, every lithium mine in the world will go into overdrive, try to expand production as fast as possible, build any new mines they could, and that will eventually reverse or slow the price increase. If you have a mine that produces 90% of their revenue from lead and zinc, they aren't likely to do the same expansion if the 10% of production that’s silver goes up 5x.
I’ve heard some people talk about the market size of silver as being $1.5T. That's the rough value of all silver ever mined in 3000 years, and is pretty irrelevant in this context. The amount of silver in investible bar form is under 3B oz, which is less than $80B. The Comex has about 110M oz, in registered inventory, and 244M oz in eligible inventory. Eligible inventory is inventory that could be put up for sale if the owners wanted, so it might not be for sale at any given price. The LBMA has 1B oz, but around 85% is already owned by ETF’s. There is lot of silver in the world, but very little for sale in an investment grade, at anywhere near current prices. For a market apparently worth $1.5T, it seems like you could buy every bar in available in the world for about $7B. That’s obviously not counting the existing demand, so it might not take a huge amount of new demand to move this market significantly.
Very insightful read here, let's not forget we are a silver junior explorer and will take off with silver.
https://www.sprottmoney.com/blog/COMEX-Silver-Offtake-Craig-Hemke-June-29-2021
@nap it doesn't really affect us though does it he can only sell once. Why you'd feel to come back a couple of weeks later is odd though , let bygones be bygones..
Looks like we have permanent exclusivity on the silver tailings lol #forthewin
Does anyone know how much approx tonnage is left in the silver tailings?