Why silver price is going down when we have such inflation?

[theman73]

12 minutes ago, Lyrinn said:

My two-pence (warning, verbose). Supply and demand.

1) Yes, inflation is going up, so, people who have circa 50oz or less and are more "silver is interesting" or "I only keep a small float for a rainy day" and are probably exiting the market - i.e. selling. Pool of buyers is smaller.

2) The pool is getting smaller. Again, inflation, but, also, a lot more people have been buying silver/gold/metals over the last two-to-three years and are now "maxed out". Pool of buyers is smaller.

3) Some of those people who are "maxed out" are now sitting on their stack because they need the prices to rise again before buying. Pool of buyers is smaller.

4) For your 1% of stacks (circa 250oz of silver) this level of investment has filled the gap in their portfolio, so they no longer need to buy. Pool of buyers is smaller.

5) For those in the over 500oz of silver band (when 50oz of silver is 1oz gold for the sake of argument) this band are longer term stackers, so, while they will buy, with inflation up, they will not be able to buy as much "float". Pool of buyers is smaller.

6) For your "whales" or "big fish" (over 1000oz of silver), these veterans are likely trying to figure out how to get their stacks shifted or wound down. Pool of buyers is smaller.

7) Millennials (guilty by association) don't value "cash" as much, so have the naïve belief that their plastic card is all they need. Gen Z can't afford even basic things, so, forget that group too. Pool of buyers is smaller. 

😎 I think, generally, people are starting to withdraw into themselves and buckle down. House prices are starting to cool down, people aren't going abroad as much; heating your home is meant to be 50% more expensive in a few months time, so people are building war chests. Pool of buyers is smaller.

 

Smaller pool of buyers, market slows down.

 

Also, the Sales threads on TSF seem a bit thin on the ground over the past few months - compared to 2021 where it was absolutely insane. This tells me that people are preferring to stick to their guns for now. There's a lot of silver at circa £23/Oz at the moment, and it's struggling to shift.

 

 

Still didn't make sense.

Inflation is up, mean all the cost are up but silver goes down...

''While we mine almost a billion ounces of silver a year these days, most of this is used for purposes other than investment, leaving only about 20% of the silver produced to be used for stores of wealth.''

mean

''Pool of buyers is smaller.'' is not quite accurate (they didn't affect up or down the price to much)

So?

Edited July 27, 2022 by theman73

[Lyrinn]

1 minute ago, theman73 said:

 

 

Still didn't make sense.

Inflation is up, mean all the cost are up but silver goes down...

''While we mine almost a billion ounces of silver a year these days, most of this is used for purposes other than investment, leaving only about 20% of the silver produced to be used for stores of wealth.''

mean

''Pool of buyers is smaller.'' is not quite accurate

Think of it this way.

Luxury goods are one of the last things that people can strip away from their budgets.

If inflation goes up, then people will prioritise basic goods (food, water, energy, shelter). Luxury goods (car, phone, clothes, investment assets) goes down through sheer force of market withdraw. What I'm suggesting above is that there is a "cooling off" period before there is a sudden explosion. The reason for this is that the suppression on luxury goods can last only so long. "People" are human after all and need creature comforts. Either they eventually riot and all hell breaks loose, or the slow down in their buying causes changes in market forces that drives luxury goods back down to a price where they are attractive.

My view is that we're currently frog marching through the decline period. Inflation will grow; interest rates will rise; a recession will follow. The bottom will be a crash. When that happens silver (and soon other luxury goods) will start going down to try and make themselves more attractive - though, this assumes that the crash isn't like what happened to Japan in the early 90's (which they still haven't really ever recovered from) or that the crash is apocalyptic (we are about to witness CBDC's next year, so that will be interesting as far as a "reset" on things is concerned).

[sixgun]

25 minutes ago, theman73 said:

The article states that the size of the global annual silver market is equal to $5 trillion.

Which article?
There is about a billion ounces of silver knocking about - so that is $19 billion.

[theman73]

So the size of the physical silver market is of $20 billion, whereas Bloomberg is mentioning $5 trillion.

Well, these $5 trillion represent the entirety of the « paper » silver market, including all « paper » financial products (certificates, options, ETFs etc.) derived from the real physical market and allowing investors to be « exposed » to silver.

This makes for a 250 to 1 ratio between the « paper » market and the physical silver market.

This would mean that, for every ounce of physical silver, there are 250 ounces of « paper » silver circulating in several financial products. In other words, only one contract or certificate issued out of 250 would be convertible in physical silver.

The disconnect between physical and « paper », or virtual, markets is considerable.

The financialization of the silver market is resulting in a leverage of 250 to 1.

Edited July 27, 2022 by theman73

[HerefordBullyun]

16 minutes ago, theman73 said:

 

The financialization of the silver market is resulting in a leverage of 250 to 1.

nope this taken from the US debt clock and it will go higher

[Bigmarc]

Supply chain problems and recession coming means less industrial demand. All of the metals are down. 

I am in the industry, the orders are there but just can't fullfil them. 

Edited July 27, 2022 by Bigmarc

[sixgun]

24 minutes ago, theman73 said:

So the size of the physical silver market is of $20 billion, whereas Bloomberg is mentioning $5 trillion.

Well, these $5 trillion represent the entirety of the « paper » silver market, including all « paper » financial products (certificates, options, ETFs etc.) derived from the real physical market and allowing investors to be « exposed » to silver.

This makes for a 250 to 1 ratio between the « paper » market and the physical silver market.

This would mean that, for every ounce of physical silver, there are 250 ounces of « paper » silver circulating in several financial products. In other words, only one contract or certificate issued out of 250 would be convertible in physical silver.

The disconnect between physical and « paper », or virtual, markets is considerable.

The financialization of the silver market is resulting in a leverage of 250 to 1.

Yep that's about it - it is paper.

[GoldDiggerDave]

Because silver is not a store of wealth, I’ve seen people saying “silver protects you from inflation” this  is spectacularly moronic as silver has not kept up with inflation over the last decade, the very thing some people says it’s supposed to protect you against. 
 

Even using the BOE inflation calculator it should have increase 1.7% per year over the last 10 years, and we all know this is well under real world inflation. 
 

the only positive at the moment, buying silver today is relatively cheaper than it was 10 years ago due to the pound being so devalued over the last 2 years.

 

 

[GoldDiggerDave]

And while I’m on my high horse🤣

How many people have said “it’s pointless having cash in the bank”   I’ve been making a pitiful 2% on my cash isa that was fixed for 5 years.  
 

The 5 years before that it was around 4-5% return.  
 

Some  seam to bash cash and the run to silver.  No matter how you look at silver it is storing less wealth than cash in the bank and that’s depreciating to nothing. 
 

 

[Happypanda88]

2 minutes ago, GoldDiggerDave said:

Some  seam to bash cash and the run to silver.  No matter how you look at silver it is storing less wealth than cash in the bank and that’s depreciating to nothing. 

Have you managed to asked some silver stackers in Argentina or Turkey about this yet ?

[GoldDiggerDave]

20 minutes ago, Happypanda88 said:

Have you managed to asked some silver stackers in Argentina or Turkey about this yet ?

Bud I don’t live in Argentina or a Turkey and if you need to pull up extreme cases for silver you are sounding like the lady who protests too much.  

in the UK silver has performed worse than cash in the bank,  my cash isa matures in September and I’ve got equivalent of 3.5oz of gold for free.   No way can you get that by holding the same value in silver. 

 

[modofantasma]

55 minutes ago, Happypanda88 said:

Have you managed to asked some silver stackers in Argentina or Turkey about this yet ?

In Turkeys case, that's the value of Lira falling though rather than silver rising? 

[Happypanda88]

58 minutes ago, GoldDiggerDave said:

Bud I don’t live in Argentina or a Turkey and if you need to pull up extreme cases for silver you are sounding like the lady who protests too much.  

in the UK silver has performed worse than cash in the bank,  my cash isa matures in September and I’ve got equivalent of 3.5oz of gold for free.   No way can you get that by holding the same value in silver. 

 

Great stuff!

Now get off your high horse and drink your milk ! 😂

[GoldDiggerDave]

Oh and if I lived in a country like Argentina or Turkey I’d stack dollars over any PM. 

[LawrenceChard]

On 26/07/2022 at 23:22, theman73 said:

Why silver price is going down when we have such inflation?

What price was silver when you looked / commented on Tuesday?

I just took a quick look, and saw a price of £15.26

It is now £15.96

Is it really going down?

Was it actually going down?

Will someone please remind me to do my "pedantic" bit about "going down"?, and I don't mean in the @HerefordBullyun sense! (Sorry Bully).

😎

[James32]

1 minute ago, LawrenceChard said:

What price was silver when you looked / commented on Tuesday?

I just took a quick look, and saw a price of £15.26

It is now £15.96

Is it really going down?

Was it actually going down?

Will someone please remind me to do my "pedantic" bit about "going down"?, and I don't mean in the @HerefordBullyun sense! (Sorry Bully).

😎

I'm with Lawrence, only a blip and now heading to moon ( again ) 

[LawrenceChard]

4 minutes ago, James32 said:

I'm with Lawrence, only a blip and now heading to moon ( again ) 

I think I would rather be with Lauren (if that's her name).

I understood your post as meaning you agreed with me, which is nice in its own way, but...

I did not actually express any view, merely asked a few questions!

😎

[James32]

2 minutes ago, LawrenceChard said:

I think I would rather be with Lauren (if that's her name).

I understood your post as meaning you agreed with me, which is nice in its own way, but...

I did not actually express any view, merely asked a few questions!

😎

Lawrence of chard.. I've reported you for argumentative behaviour..

[GoldDiggerDave]

Some of you guys have collected silver for years has there been any time where silver      has performed better than inflation? 
 

 

[GoldDiggerDave]

4 minutes ago, James32 said:

Lawrence of chard.. I've reported you for argumentative behaviour..

Stop upsetting silver stackers on the naughty boy step forum 😂

[LawrenceChard]

26 minutes ago, James32 said:

Lawrence of chard.. I've reported you for argumentative behaviour..

Oh no!

... or perhaps...

Oh no I haven't!

😎

21 minutes ago, GoldDiggerDave said:

Stop upsetting silver stackers on the naughty boy step forum 😂

I was simply asking a few questions!

😎

Edited July 28, 2022 by LawrenceChard

[ArgentSmith]

14 minutes ago, GoldDiggerDave said:

Some of you guys have collected silver for years has there been any time where silver      has performed better than inflation? 

It depends on entry and exit points, when was the last time cash returned a positive real rate. Silver is up 25% over the last 5 years, how much did your cash isa yield over that time?

[LawrenceChard]

15 hours ago, theman73 said:

So the size of the physical silver market is of $20 billion, whereas Bloomberg is mentioning $5 trillion.

Well, these $5 trillion represent the entirety of the « paper » silver market, including all « paper » financial products (certificates, options, ETFs etc.) derived from the real physical market and allowing investors to be « exposed » to silver.

This makes for a 250 to 1 ratio between the « paper » market and the physical silver market.

This would mean that, for every ounce of physical silver, there are 250 ounces of « paper » silver circulating in several financial products. In other words, only one contract or certificate issued out of 250 would be convertible in physical silver.

The disconnect between physical and « paper », or virtual, markets is considerable.

The financialization of the silver market is resulting in a leverage of 250 to 1.

Some of what you say is similar to "Fractional Reserve Banking".

I won't attempt to explain it, may TSF members will have heard about it, and if not, it's easy to Google it.

This 250:1 ratio you quote is not necessarily "leverage".

😎

[Darr3nG]

10 minutes ago, LawrenceChard said:

I was simply asking a few questions!

[GoldDiggerDave]

2 minutes ago, ArgentSmith said:

It depends on entry and exit points, when was the last time cash returned a positive real rate. Silver is up 25% over the last 5 years, how much did your cash isa yield over that time?

I know cash does not really give any return as inflation is always greater than the interest you get.  Over 10 years where silver has not moved cash in the bank as done better,  factor in postage storage, capsules the average silver stacker is losing loads in real terms over the last decade.  Silver has not moved with inflation over a decade, and from what I’m seeing it’s looking like it hasn’t for a while.

Agree about the entry and exit, as anyone can look back on a graphs and pick out the optimum times, silver was around £15 10 years ago it’s around the same today, almost anything you  could have bought would have out performed silver.

I can’t stress enough I’m not against silver you can make money with it, but when you factor in all the other cost over the last decade there are seriously diminishing returns and you need to hold mountains of it for any reasonable return and buy and sell at the optimum time.