Signs Of A Bottom In Gold And Silver Prices

Availability has actually improved some since the height of February’s buying frenzy. However, scarcity-driven premiums on popular products such as Silver Eagles remain elevated.

It is unusual for extremely stressed conditions in the bullion market to persist while spot prices merely bounce around within a capped range.

Although frustrating for bulls, the people who should be nervous in this environment are the bears – in particular, the naked short sellers. They face unlimited risk in the event of a price spike driven by physical shortages.

A demand strain on minted bullion products doesn’t necessarily imply a shortage of silver itself.

At least not immediately.

Industrial users of silver normally command a much larger share of the total physical market than investors. But the pace of investment buying over the past year (nearly 600 million ounces) has shifted the scales to the point where it actually exceeds total industrial demand.

Of course, industrial demand for silver suffered last year due to economic lockdowns that are gradually being lifted. As manufacturers ramp back up, so will their need for silver.

But industrial demand can’t return to normal at the same time as investment demand remains elevated without generating a massive supply deficit. These powerful dynamics of physical supply and demand will ultimately exert pressure on prices – perhaps putting a real “squeeze” on paper silver short sellers.

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George Lipton 2 months ago Member's comment

There is no bottom for #gold and #silver, until they hit zero. Worthless metals it would seem.