The Truth About Silver Right Now: Data vs Hype

Jeffrey Christian: Take a listen to that range, $60 to $97. That’s an enormous range. Investors can and you’re seeing them do this, when the price gets down below $70, they’re buying, and when the price gets over $80, they’re selling. There could be a lot of money made in that $60 to $97 range, over the next five months, on a shorter term buying and selling by investors, with the view that at some point you’re going to pivot and you’re just going to be long.

Introduction: Anchors in a shifting world. The strategic case for precious metals with Monex and CPM Group.

Sean Brazney: You know, we talked a little bit about, before we started, about silver. We’ve seen a huge run-up coming into obviously January, February. We saw a really good correction and I’ve seen everybody go from calling for $300 an ounce silver to now everybody kind of sitting back and thinking, “Well now, I think it’s going to go down.” Where do you think we’re going between now and summer or maybe now and the end of the year? Can you bring us back and give us some solid ground for silver.

Jeffrey Christian: Sure. Let’s start with talking about the fundamentals. We have mine production pretty much flat. Secondary recovery, old jewelry and silverware that’s been being sold, because the price has risen. That’s risen sharply last year. It’s probably going to rise more this year. Fabrication demand is holding up relatively well. We’re seeing some weakness, partly because of the price, partly because of new technologies that reduce the amount of silver in some products, and partly because manufacturers are pulling back on production in concerns of that we might be moving toward a recession, but fabrication demand is still pretty strong. The key remains investment demand. Inventories globally are rising. The market’s well stocked. There’s some dislocations. There’s some dislocations in India and in the Islamic world, because Dubai’s been shut down due to the war, and you’ve closed the airspace, and you’ve closed the waterways into Dubai. So, that’s caused some friction. So, it really comes down to investment demand and investors have been buying more silver. They sharply increased the amount of silver they were buying last year, and you also saw a reduction of what they call “stable liquidation.” Investors who had bought earlier saying, “Hey, at $30, $40, $50, $120, I’ll take my profits on my silver.” You’ve seen a reduction in that gross investor selling, and a sharp increase in the number and types of investors buying silver, and the volumes that they’re buying silver. So, we saw a big increase last year and we’re looking for an even bigger increase in net investment demand this year, partly because we don’t see the gross sales, but partly because we see very strong net investment demand. Now in terms of the price, there is some seasonality that often leads the price to plateau in the second and third quarters, and that may kick in. We may be seeing that now. Really since I guess the beginning of February, we’ve seen silver trade in a very wide range, like $60 on the low end and $97 on the high end. That range may continue for the next five months into and through August. Our expectation is that at least by September, the price starts rising again, because there are a lot of political and economic factors that should be causing investors to want more silver. Those political and economic factors could override the seasonal of seasonality and we might not see that plateau, but right now, it’s looking like we’re probably going to see that plateau. But take a listen to that range, $60 to $97. That’s an enormous range. So, investors can and you’re seeing them do this, when the price gets down below $70, they’re buying, and when the price gets over $80, they’re selling. There could be a lot of money made in that $60 to $97 range over the next five months, on a shorter term buying and selling by investors, with the view that at some point you’re going to pivot and you’re just going to be long.