JIT and Silver Demand.
cladking
Posts: 28,656 ✭✭✭✭✭
It never really occurred to me before but I was talking to a friend and mentioned Musk bought a silver mine to assure his many high tech companies would always have access to silver, but a very large part of silver demand is on a "just In Time" basis. When buyers panic they'll not only need silver for delivery tomorrow but for weeks and weeks. Each panicked buyer will need dozens of times more silver than they have in stock on a "normal" business day.
When the paper silver blows away it will expose massive demand.
Tempus fugit.
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I think that massive demand for silver will materialize when paper money, electronic money and CBDCs have all been rejected en masse. What are the odds?
I knew it would happen.
Without money the economy wouldn't function at all. It would be bedlam. In a year or two a handful of survivors might use silver but more likely gold.
I believe we are approaching a situation where the world is living hand to mouth with silver and this is occurring as silver demand is ratcheting higher. Any deficit caused by any reason in supply for industry would set off a buying panic.
"Money" is anything people think it is but no matter how silver is denominated it is required for the functioning of the modern economy. Anything causing a disruption in supply or even the threat of such a disruption would have severe consequences. Banksters have been playing with silver for a very long time and everything they've done has led to the permanent destruction of the metal and lower prices. They have created a world where it appears silver is plentiful in order to profit at the expense of the future and the commonweal. I believe when this illusion disappears a buying panic is inevitable.
Silver never has, nor will be in the future, a "savior" for economic woes. Gold on the other hand, did have an impact long ago, that does not mean it might again at some point in the future.
Why on earth would buyers be in a panic to buy gutter metal? It's just not going to happen. RGDS!
The whole worlds off its rocker, buy Gold™.
Silver is used in many "green" energy sources including batteries. So it's not hard to make the connection.
If the world turns to Battery vehicles, imagine the cost of electricity once that occurs. There's money to be
made. Buy the "pitch forks and shovels" of the new auto industry.
Goldman Sachs, JPM and several large hedge funds are warning about a bond market meltdown. When that happens, what do you suppose will happen next? More dollar printing? What then? More massive spending on crap that nobody wants nor on what can they afford.
Silver and gold may not be a saviour for economic woes, mainly because it doesn't cure the problem of gross mismanagement of the economy, or the problem of corruption that seems to be endemic across the banking system and markets.
However, gold and silver may very well be a lifeboat for people on a personal level. Much more so than dollars, stocks or bonds. You heard it here first.
I knew it would happen.
per the post above from jmski52:
"However, gold and silver may very well be a lifeboat for people on a personal level. Much more so than dollars, stocks or bonds. You heard it here first."
Not really. I've heard that possibility from you, over & over again for the last 15 years. It might very well happen, but unlikely in our lifetime.
edited to identify whose comment being quoted.
See? I told you that you heard it here first.😉
Aside from that, what do you think is gonna happen to your stocks when the PPP stops pumping up the stock market?
It’s all relative, and you won’t be sorry that you’re holding metals.
I knew it would happen.
Copper perhaps but certainly not gutter metal. Nobody will be in a panic for the Cu either. Both are far from "precious". RGDS!
The whole worlds off its rocker, buy Gold™.
Most likely the same that would happen if the Moon left it's orbit.😉
Anything that copper can do, silver can do better.
Is the difference in cost justifiable ? Usually not.
But in some cases, there is no viable substitute for silver.
Silver is the most remarkable element on earth. Through human history it was treasured for its beauty and characteristics but it was so common that it was a weak sister to gold. Today principally because of inertia gold is still valued at many multiples of silver despite its wide availability and greatly limited usefulness. Meanwhile every day that goes by new uses are found for silver.
There is not a great amount of silver and even its greatest consumers tend to have only a few days of supply because governments have made it highly uneconomical to maintain any supplies of anything.
If the shenanigans in the financial system ever crack many tons of silver people believe exists will simply evaporate. As institutions fail the tiny amount of metal that they actually have may not be given to its many owners. In such an environment how could a buying panic not ensue.
Certainly this would require a spark but my contention is that the situation is continuing to become more volatile because of the low opinion in which silver is held, the high opinion in which gold is held, and the increasing demand for this "gutter metal".
Panic buying in silver could be an unmitigated disaster of Biblical proportions. Of course there are steps that can be taken to keep things running and to prevent collapses in other markets. But silver is different than other commodities. If there is no steak people can eat cake but if there's no silver one industry after another will shut down because almost all high tech products from computer chips to medicines require silver to produce. The silver MUST BE available and the nature of buying panics is to "hide" what is needed from everybody. Most large corporations simply don't care if they spend $10,000 per day for the silver they need to operate or $1,000,000. It's not a major expenditure. What exactly do they do when their supplier is out trying to secure supply because they found their old supply isn't worth the paper it's printed on? I'm betting they join the panic.
I don't disagree but if things get to this point then survival tools, food, and water would be more valuable than silver. Sure you could make money with gold and silver but there might not be too much to buy.
It's highly unlikely that "mankind" will ever run out of silver. If & when silver becomes "profitable," the melting pot will be overflowing, just as they did in 2010 & 2011, and once again, silver will be down to normalcy. History has a habit of repeating.
Cost of mining keeps increasing. While there is substantial 'legacy silver" much of it is museum pieces and collectibles. It will not be hitting the melting pot except at very high prices and some never will because it is literally priceless.
What will be hitting the melting pot is silver coins from all over the world but the total overhang of this silver will last industry only several years. It is perception that drives price and perception changes very slowly right up until it changes quickly; time don't fly, it bounds and leaps. In this specific case it leaps right from commonly being considered less valuable than gold and far more common to being infinitely valuable and virtually no more common than gold. Gold exists in huge stockpiles all over the world and is mined at about 8% of silver. While the gold flows to stockpiles and recoverable usages silver is used up. It does not exist in any large quantities anywhere.
cladkind: "While the gold flows to stockpiles and recoverable usages silver is used up. It does not exist in any large quantities anywhere."
Silver, like copper, is just another industrial metal. If either ones becomes "rare or scarce," substitutes to take their places will be found.
I don't believe this is really true.
For one copper is immensely valuable but if it were a rare metal it wouldn't be very useful at all. We'd just have to build more power plants and use other means to transport the power.
But silver is immensely valuable even in small quantities. More and more often there is simply no substitute whatsoever to silver. Even in its less critical roles far higher prices would have little effect on the demand because so little is used in every application.
When the LME defaulted on nickel in 2008 it was not so important because there are substitutes and it doesn't really matter if a scalpel rusts or not since their longevity is low. Blades don't last long enough to rust anyway. We have stainless that is no longer stainless but like all the garbage made by 9industry consumers don't really mind.
But they will mind when their phones computers don't work so they can't call the doctor to complain the medication doesn't work. There are limitations on what even consumers can tolerate.
This is neither here nor there since factories will have to shut down without silver anyway. Silver is required at almost every stage and place in a consumer economy run Just In Time.
This hardly means a buying panic is imminent, merely unavoidable. This is because you can't make product with nothing but good intentions and finance.
Without copper there isn't nearly enough silver in the world to even make the generators far less the transformers and distribution networks. Without a little bit of silver our networks could not run and nobody would need power anyway.
Every product in the world needs raw materials and a means to transform them into a product that can be shipped to individuals who value that product more than their money.
You don't want to tamper with any integral part of every system. Bonds, money, and products are fundamental to the economy. Silver has tentacles to everything in our economic system.
I'm glad to see, that you agree, that silver and copper is an industrial metal and I'm sure both of us will be long gone before our supply on this planet runs out. At that point, mankind most likely will be mining asteroids for those metals.
I agree completely except that i believe it will be decades before we can economically mine asteroids and that silver demand will continue to increase exponentially. Perhaps we won't run short before it happens but people are highly predictable. Most of us jump on bandwagons and the common wisdom has been silver is in ample supply since shortly after the great pyramid was built. In those days silver was more valuable than gold.
Silver is both an industrial and a monetary metal. The monetary component will increase demand exponentially when confidence in the financial system is destroyed by gross mismanagement of our government finances and fraud on Wall Street and in the corrupt banking system.
Bonds are selling off globally right now. Who’s buying them now, other than the Fed via the NY Fed’s trading desk? It’s one big circle with nothing to back it up.
The overpriced stock market’s not gonna like it if the Fed’s PPT doesn’t jump back into the market and start buying the large caps as well (with new money, created from thin air, of course).
I knew it would happen.
I disagree bc the EV industry has been one reason silver is over $20 an ounce and not $5 an ounce. JMHO.
Silver used in EV's are a very small factor. Their usage represent a small % from the over 900million oz that are produced annually. (approx. 5%)
In each EV, depending on the model, there are between 25 and 50 grams of silver. That is little more than in hybrid vehicles which are used between 18 and 34 grams of silver.
Well I disagree. The majority of silver mined each year is used by various industries. Around 40’percent is left for investing. I’m only suggesting there’s a floor to the price of silver. That may be lower than it’s trading at today. But with the modernization of 3rd world countries and spread of wealth around the globe, there little reason to believe silver prices will collapse. Again imho.
I agree with your potential possibilities. On the other hand, I do not believe that the amount of silver being used in E.V's will have much of an impact. Granted, silver will remain in the $20 range, but it's doubtful that we will see $30 silver anytime soon.
Ted Butler has a better way with words than I.
https://silverseek.com/article/money-versus-metal
The moon is moving farther away from the earth and eventually there will be no more total solar eclipse, 1.2 billion years.
That's NOT what they said.
I believe much sooner than that but your gist is essentially correct. Days are lengthening, too.
It's just a double quirk that at this point in time...in our history....the apparent size of the Moon is such that it just covers the Sun in the sky during an eclipse. Hundreds of millions of years ago it couldn't cover it...and in the future it will overcover.
Dear Chairs Gensler and Behnam,
I respectfully petition you to settle an issue that straddles your jurisdictions. The issue concerns the accurate public reporting of recorded silver bullion inventories held in the world’s largest silver ETF, SLV, of which BlackRock, Inc. is the sponsor and in the COMEX-approved silver warehouse inventories, of which the CME Group, Inc. is responsible.
The issue centers on the holdings in the JPMorgan COMEX silver warehouse, which currently amount to just over 134 million oz (of the 266 million oz total COMEX holdings) and the 103 million oz reported by BlackRock (of the total 441 million oz in the trust) as being held on behalf of SLV in New York by JPMorgan (which happens to be the official custodian of the physical metal held by SLV.).
The issue revolves around whether the 103 million ounces held on behalf of SLV by JPMorgan in New York is part of the 134 million oz reported by the CME Group as being held in the JPM COMEX warehouse or if these are two separate silver holdings. Since the quantities involved are quite large, it makes a difference to silver investors whether these are two distinct holdings or if this is, effectively, a matter of double-counting. I’m sure you would agree that transparency is the best policy and that investors would be better served if the situation was made clear.
It is because this issue involves different jurisdictions, with the S.E.C. responsible for accurate reporting on SLV and the C.F.T.C. responsible for the accurate reporting of CME Group COMEX warehouse data, that I write to you both. In order to streamline what should be a rather simple resolution process, I am copying this message to the CEOs of BlackRock, the CME Group and JPMorgan, all of which I’m certain would be interested in setting the record straight.
On a separate note, I would like to thank Chairman Gensler for any assistance rendered as a result of my petitions last year about the excessive short position in SLV, as recent data indicate the short position fell from 60 million shares back in August 2022 to 16.5 million shares in the most recent short interest report, as of Oct 31, 2023, a reduction of 72%.
Sincerely,
Ted Butler
https://silverseek.com/article/answer-long-overdue
I've always liked Ted Butler since we agree so much but I'm coming to have a great deal of respect for him as well.
If 103 million ounces of silver disappear at this time the shorts are going to be caught with a lot more than their shorts down.
This is what has worried me since we started running deficits in the 1950's. We spend money like a drunken sailor never realizing that eventually the tab will be presented and he must report for duty onboard and on time.
Now days the tab is so huge few people really believe it can be paid at all and we still use debt as money since all financial instruments are representative of debt now days. Bonds, stocks and the dollar can just blow away like so many dandelion seeds if the computers decide it's time to get out.
Anyone who thinks Bitcoin will save them might be surprised to see this instrument of crime, greed, and waste is the very first thing to hit 0.
It's scary when you live in a world based on greed and whatever corruption leaders can get away with.
I only hope the computers that run the investment world pull the rug out from under us gradually as they have for the last couple years. As long bonds have lost more than half their value they could lose the other half in a few minutes. The greed is so overpowering the computers would not be shut down as each operator hopes to get rich off the total destruction of the US economy.
Long before that. About 575 million years based on the scientist/astronomer our club had speak a few years ago.
The short position by the letter-writers own data went down by 72% and the SLV price went from about $17 to $21, lagging other metal runs. I don't consider that the second coming of any Gamestop squeeze.
That's not how bond math works. Duration and convexity insure your scenario doesn't happen. You can't "lose the other half" of the decline in long-duration treasuries that happened the last 3 years. It's a rare, mathematical occurrence that didn't even happen in the 1970's in that kind of time frame.
The EV industry is responsible for about $0.50 in the price of silver right now.
So you are going to scare yourself out of markets for 75 years because of "deficits" ? That doesn't sound very smart, IMO.
Betting on Armageddon is not a sound financial or investment practice. Very RARELY works in our nation's 250 year history.