The Truth About The Silver Squeeze

Let’s use an analogy. You would not make assumptions about the global coffee commodity market if the coffee shop at the mall raised the price of a triple mocha latte. The market for trendy drinks at the mall is a different market than for 37,500-pound lots of Arabica beans. The same applies to a silver coin at a retail bullion shop vs. 1,000-ounce bars.

These are different markets, with different drivers.

According to Jeffrey Christian of precious metals analyst firm CPM Group, there exists around 3.4 billion ounces of physical silver in bullion form in the world today—plus another 2.0 billion ounces of coinage. All of this is available to buyers, at the right price. Not to mention grandma’s tea service, and mom’s silverware.

Jon Potts who is CEO of Fidelitrade, a large wholesale dealer, said that “the shortage of retail silver products is due to strong retail demand plus manufacturing slowdowns due to Covid.”

Janie Simpson, Managing Director of ABC Bullion in Sydney, Australia, also spoke on the record. “ABC Refinery is the largest silver refinery in Australia, refining approximately 85% of the silver refined in Australia and 70% in Australasia. We have significant supplies of refined silver product in bar formats available for delivery”.

Monetary Metals is not in the precious metals dealing business. However, we will put this out there. We will sell 1,000oz silver bars at spot + 5%. As many as you want to buy.

The True Supply and Demand Fundamentals for Silver

Here is a graph of the supply and demand fundamentals of silver.

Silver Basis Continuous

The basis (blue line) is the abundance of the metal to the market, and the cobasis is the scarcity. The green line is the price of the dollar in silver terms (inverse to the conventional price of silver in dollar terms).

What we see is that the silver price has moved sideways since mid-December. And while this was going on, it was becoming scarcer through early February. Since then, scarcity has moved sideways.

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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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