The Truth About The Silver Squeeze

Silver Squeeze

Keith wrote about the silver squeeze narrative originally here, then here, and again here. This article is his latest commentary. 


Some recent videos about the silver market are generating more buzz than we have seen in a while. They make several points, but the main one is that there is a global shortage of silver. This assertion stands in contradiction to the fact that the silver price has dropped. As of the date of the first of these videos, it had dropped around 10% from its level just a month earlier.

An 8th grader is a good litmus test for ideas in economics and markets. What would a teenager say happens to the price of a commodity, when it becomes scarcer? ”It rises!”

So how do adults assert that a big scarcity is developing, while the price is dropping? They claim that the price is “fake.” That the market is “fake.” That it’s all “fake, fake, fake!”

They claim that you can’t really buy silver at the price you see on the screen. Because that’s not really the price—at least, not the price they think it should be.

We’re going to take flak for saying the price is not fake. The usual suspects don’t want us to write this article. So why are we doing it?

What’s best for Investors?

We believe an informed public makes better decisions, and this leads to a better market. In researching this story, we spoke to a few dealers who preferred not to comment. They feel that it’s good for business if people are panic-buying. Another did not want to say in public that it has 1,000 bars to sell (which it does) Instead, they preferred to pontificate on supply and demand theory.

But investor buying based on an error is, at best, pulling demand forward. There are good reasons to buy silver, without the conspiracy theories.

Understanding the Market for Silver

The fact is that there is a shortage of retail silver products, such as coins and small minted bars. The high premium on these retail products (and the long delivery delays) reflects this shortage (if you have silver coins, Monetary Metals can turn this premium into an instant yield on silver, paid in silver—just give us a call).

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Disclaimer: The content in this article is provided as general information and for educational purposes only and should not be taken as investment advice. We do not guarantee the accuracy ...

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