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By Jeff Clark

 

Senior Analyst, GoldSilver.com

As we outlined in our silver supply/demand crunch article, the silver market has entered a structural imbalance. It is not temporary. Global supply is locked into a decline, leaving the industry ill-equipped to respond meaningfully to any spike in demand of physical metal for the foreseeable future.

Underpinning the erosion in supply is the deterioration in mine production. This is important, because most of the bullion you and I buy comes from newly-mined silver. Secondary sales (products that have been previously bought and sold) will always have a place in the bullion industry—and a growing role in a supply/demand crunch—but to be prepared for the kind of rush Mike Maloney see ahead, mine production will need to be healthy and rising.

It is neither of those things, as you’re about to see. Global mine production is caught in an intractable downward spiral, and the tiny sector of primary silver producers are stuck in an unhealthy quagmire. Worse, there’s no real end in sight.

This is both concerning and exciting. Here’s why…

Silver Miners: Keeping Their Chin Just Above Water’s Surface

Global silver supply fell last year due to a decline in both mine production and scrap supply. But the drop in mine supply was the primary contributor to the decline. And it’s the primary reason new supply will continue to fall. 

Most industry consultancies predict that silver mine production will be lower again this year, and as a result drive total supply lower. If this plays out as most analysts expect, silver supply will fall to levels last seen in 2008. 

Here’s what the annual change in mine supply looks like since 1951.

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The current drop already outweighs anything we’ve ever seen in the past, including the four-year drop in the early ‘90s. Worse, no reputable analyst I know of is predicting that silver mine output will suddenly reverse and grow any time soon.

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Then we see the dump of paper gold and silver today to send price down. Completely disconnected from the physical reality. The world is on a potential war footing in the Middle East, the US economy is floundering - if it wasn't there would not be calls for a 1% drop in rates and more QE coming from Trump, real inflation is roaring away - it has to be, look at all the fiat the banks have been pushing into the bond and stock markets - look at the prices in the shops. A long list of woes and yet gold and silver sent down. Central banks buying up all the gold - the supply of silver declining. For me the obvious thing is to be a steady buyer - just buy when funds allow and keep buying. 

Edited by sixgun

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notice how year ~2000 has the largest change in silver mine

supply of 70+million. in 2000 we had some of the lowest prices

in silver across decades. if record increases in silver production

comes at a time when silver is finally about to reach multi

decade lows in the silver price, what does that tell you about

demand and supply for silver?

 

(their interpretation of the data is misleading. this is not to say

that silver is not a good buy right now. you should use better

sources to help you decide whether or not to buy silver now)

(listen to david morgan when he says the silver price is all

about the demand for silver. ie it's got very little to do with mine

supply)

 

HH

Edited by HawkHybrid

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We know the demand for gold is ramping up. We know that when countries have demanded their gold back it has been refused, it has been delayed or only some of it is returned. Commonsense tells you that the drop in price in gold today runs counter to the physical supply/demand. If you came into the market wanting 25 tonnes of physical gold (not paper promises) you would never be able to get it at anything near the 'spot price' and yet 100's of tonnes of paper gold are regularly dumped into the market at market price.

The paper price game will last until there is no longer enough physical to supply those who refuse to have anything other than the physical and won't go away. At that point it all breaks down and badly - very badly. The G:S ratio is just stupid at the moment - it is 88.5 - it has not been so high since 2009 in a brief spike when the markets were collapsing and gold/silver got smashed. In the last 100 years it has only been higher twice - during WWII (when price was fixed) and in the early 1990's when the Gulf war was on and there was a recession. 

Silver is being used to try to get gold down but gold isn't going down like it 'should' - this is why the G:S ratio is so high. They are pushing on the brakes and the pedal is to the floor but the train is hardly slowing. This has got nothing to do with physical markets - it is market manipulation /management to get gold down with the help of the tiny and more easily managed silver market. The ratio could go over 100 before the brake pedal snaps off. The charts say the G:S should come down - the MACD is bullishly divergent - but this is purely manipulation so we could see divergence for months and months. 

What we have before us is discounted prices - if you can get gold and silver at something like spot and you have the funds i would buy it and hold onto it. The ratio might go higher but these extremes don't happen often so i will continue buying silver.

Edited by sixgun

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Anil Mangal trader who has a long position in Silver going to wipe his live account 500,000 Euros. As yesterday already down by $72,000 dollars before silver moved 30 cents lower. Anyone is unhappy about spot price of Gold/Silver just be happy holding onto the physical metals as oppose to leveraged futures contracts.

https://www.youtube.com/watch?v=AEJhEYkYS0c

image.thumb.png.aa623a56c28ab0531bcd8581f97d5738.png

Edited by Abyss

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randomly betting on silver going up is gambling and not

trading. (basing your trading choices on fundamentals is

the equivalence of randomly betting. when was the last

time multi decade/century fundamentals changed to

signal selling in silver? was it 2011? maybe it'll be at the

top of the next bull run?)

 

historically the silver price tends to weaken over the summer

months. betting against this is having the odds against you.

what a stupid large position to take?

 

HH

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Not taking into account further $0.10 cent lower Silver price today position stands at $92,000 loss. I believe the trader Anil Mangal has 70 lots size equivalent 350,000 oz Silver so every cent move equals $700. I don't know how to read Saxo Trade go statement but long $15.82 current price $14.40 loss £$1.42. 142 points x $700 = $99,400 loss.

image.thumb.png.bf27ba5cbc4587b01c244b83f2359dca.png

I only came across the Anil Mangal YouTube channel because I view lot of PM and trading oriented content. I have no idea what possess someone to take on any position in any leveraged financial product without a stop loss let alone that large position size @HawkHybrid. The trader is adamant never exit his Silver position and I know it is unlikely but Silver will need to move a further $5 down to $9 level for the trader to receive margin call and be forced out of his position.

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On 16/05/2019 at 15:15, sixgun said:

We know the demand for gold is ramping up. We know that when countries have demanded their gold back it has been refused, it has been delayed or only some of it is returned. Commonsense tells you that the drop in price in gold today runs counter to the physical supply/demand. If you came into the market wanting 25 tonnes of physical gold (not paper promises) you would never be able to get it at anything near the 'spot price' and yet 100's of tonnes of paper gold are regularly dumped into the market at market price.

The paper price game will last until there is no longer enough physical to supply those who refuse to have anything other than the physical and won't go away. At that point it all breaks down and badly - very badly. The G:S ratio is just stupid at the moment - it is 88.5 - it has not been so high since 2009 in a brief spike when the markets were collapsing and gold/silver got smashed. In the last 100 years it has only been higher twice - during WWII (when price was fixed) and in the early 1990's when the Gulf war was on and there was a recession. 

Silver is being used to try to get gold down but gold isn't going down like it 'should' - this is why the G:S ratio is so high. They are pushing on the brakes and the pedal is to the floor but the train is hardly slowing. This has got nothing to do with physical markets - it is market manipulation /management to get gold down with the help of the tiny and more easily managed silver market. The ratio could go over 100 before the brake pedal snaps off. The charts say the G:S should come down - the MACD is bullishly divergent - but this is purely manipulation so we could see divergence for months and months. 

What we have before us is discounted prices - if you can get gold and silver at something like spot and you have the funds i would buy it and hold onto it. The ratio might go higher but these extremes don't happen often so i will continue buying silver.

Russia and China have been buying up physical gold since before britain sold theirs off...maybe now silver futures are being sold off...im seeing more people looking to buy 100 oz bars now, even selling jewelry to do it...these seem to not be dumb people, even baseball cards to buy silver...not gold...im thinking we are near the bottom and now its none silver owners buying the lowest spot silver they can get, and at $1500 a time they are not poor folks doing the buying.

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7 hours ago, DarkChameleon said:

Russia and China have been buying up physical gold since before britain sold theirs off...maybe now silver futures are being sold off...im seeing more people looking to buy 100 oz bars now, even selling jewelry to do it...these seem to not be dumb people, even baseball cards to buy silver...not gold...im thinking we are near the bottom and now its none silver owners buying the lowest spot silver they can get, and at $1500 a time they are not poor folks doing the buying.

i have a Kinesis minting account - to do with the Kinesis currency system. It is not open to the general public at the moment so the volume going through is relatively low but it is still several $million. You 'mint' units of 100 KAU - this is you buy 100g gold which is owned by you through your wallet as 100 KAU on the blockchain. Then there is silver, the minimum is 200 KAG which is 200oz of silver.

The silver works out about $1000 less for 200oz over 100g gold, which might partially explain why i see much more silver being minted but in spite of this, the amount of silver is so much more and when i see multi lots of silver going through it is not like someone is scraping together enough cash for a single unit of minting, it is a conscious decision to mint silver over gold.  

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