Silver Mega-Bulls Go Mainstream
China's MASSIVE buy, JPMorgan’s $46 prediction, Money Week's front-page, major shortage, manipulators in panic mode?
Silver buyers have in recent years been on the backburner. They have been waiting for silver to increase roughly 6X to return the gold-to-silver ratio to historical levels, waiting for the mainstream to stop ignoring it, and waiting for the price suppression to start falling to pieces.
This seemingly quiet last week has just been hit with so much silver news, it has pushed its way into the mainstream and can't be ignored. Each point here is a gamechanger deserving its own article and is the biggest news for silver in the last decade:
Money Week's New Front-page: "Silver set to surge"
Britain's best-selling financial magazine has just written a mega-bullish article on silver. The article has some highly compelling information that is condensed for your convenience below:
Biggest Producer Hits a Wall
Roughly one billion ounces of silver were produced last year. Demand was 1.14 billion ounces. This illustrates that there was already a large silver shortage as of last year. Despite higher interest rates bringing pain to buyers, and a 20% reduction in buying, there was still a 140-million-ounce deficit.
Looking forward, the world's biggest silver supplier may be in trouble. Mexico produces roughly 25% of the world's silver. Their production has recently been declining each year by double-digits and they could exhaust their reserves by 2026.
Why? Mexico has cracked down on the mining industry. It is now more difficult to get permits and there is more red tape involved, which goes hand-in-hand with any successful industry.
JPMorgan: Silver to $30 per ounce ($46 AUD)
From the article, JPMorgan is quoted as saying “The Fed cutting cycle and falling U.S. real yields are expected to push gold prices to new nominal highs in the middle of 2024, reaching an average of $2,175/oz by the fourth quarter.” The most powerful bank in the U.S. boldly claims that “Silver prices will probably follow gold, averaging around $30/oz in the fourth quarter.”
AI and Solar
SchiffGold notes that artificial-intelligence and the equipment it relies on could propel silver demand heavily this year. Although, they will need to get the silver while they can because according to the University of NSW, by 2050 solar panels will be eating up potentially 98% of the current global silver reserves.
Just after the Money Week article hit, even more major silver news started to leak:
Record Large Silver Buyers
Butler Research has just picked up an anomaly in silver futures positions. It appears that around January, the number of “other large reporting traders” rose from 49 to 78. This may be the largest number of long traders and the largest increase in history. 29 traders have upped their silver longs to the level of having to do reporting (150+ contracts). These traders have gone big on silver and used high leverage, which requires a great deal of conviction.
They'll Just Knock It Down...?
The paper to silver ratio shows the number of paper (mostly ‘naked’ or fake) silver contracts being traded for every real ounce of silver. Roughly a year ago, it was about 300:1. This was a huge disparity and showed how desperately shorters were in holding down the silver price. Note that this deceptive exercise is hugely risky and expensive. Trading "fake silver" is especially problematic if more and more physical silver is making its way to buyers (at a nice fake, low price), thereby leaving the manipulators with even less actual silver.
Shorters In Panic Mode?
The ratio has recently spiralled seemingly out of control and is now almost 400:1. According to U.S. Debt Clock, Silver paper contract manipulation is now 2944.94% worse than crypto… This is a dramatic rise in paper contracts and potentially means that manipulative short-sellers have lost control and gone into panic mode.
Last, but not least:
China's Massive Buy
In January alone, China imported a whopping 3,024,000 troy ounces of gold and 12,096,000 troy ounces of silver! The silver imports are the highest since December 2020. At the time, inflation (money supply increase) was going rampant and countries like China were intelligently trading their paper for assets. Perhaps they see something coming, as they have pre-emptively started the same silver buying pattern from earlier.
With a looming pivot back to easy money, and the next round of money creation needing to be magnitudes larger, it may not be a surprise why they have restarted their massive silver buying.
When you combined all this with our Global Liquidity investment driver, 2024, by all these accounts, could very well be one for the record books.