The Future Of The Silver Market: Looking At Supply And Demand

Silver, Bars, 5000 Grams, Real Value

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For any market to move up, more buying pressure is needed. Buying pressure comes through several avenues. In the case of silver education and awareness are required because it is the best value investment in the commodity sector. That being said, the rise of the subreddit group, Wall Street Silver, is starting to expand into what I believe is the most important community to increase the awareness of silver investing. WallStreetSilver symbolizes the proactivity of the younger generation that understands silver and the benefits of an honest financial system and is determined to spread the word.

The GameStop short squeeze was a significant headline this year. It forced the elite in the financial system to recognize main street investors are capable of far more than once believed. The silver short squeeze may not be playing out as fast as that, but it’s important to recognize that the historic shorting of silver won’t be undone as fast as that of a stock like GameStop. There is more resistance to break down — but it’s happening.

Let’s talk about supply and demand…

Just last year, in 2020, the amount of silver purchased for investment in commercial bar form — what the ETFs take into consideration — was the highest on record by far, around 300 million ounces. Factoring in the retail market demand, which by metric was roughly 200 million ounces, we end up at a stifling total of 500 million ounces. That’s unheard of. I have studied the silver market for many years now, but I have never seen that kind of physical demand in the silver market in my lifetime.

That was last year. If we continue on this basis, going forward in 2021, there is little doubt in my mind that a silver supply squeeze will materialize. Why? Because it’s important to account for the other half of the market: the industrial side. Industrial demand typically lands at around 500 million ounces, and while industrial demand was affected as the global pandemic played its course, this is only a temporary disruption.

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I discussed these topics, and more — such as the historic strategic silver stockpile of the USA, other government silver stockpiles, JP Morgan’s naked short in silver and the CFTC’s ...

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