Austin Schmidt Profile picture
Sep 14, 2022 12 tweets 4 min read Read on X
Last weekend, I covered why the energy crisis is driving an accelerating #silver supply-demand imbalance. Now, let’s take a shot at the WHEN question by taking a quick look at charts from the bears of the past, with the idea they may be prologue.
Note: I do NOT think I can time this with any precision. If my flip to bullishness in late August was the bottom, luck will have played a big factor. I have zero qualifications. I just like commodity markets. To the charts! 👇
Let’s start with the DotCom Bust.

#Gold found its bottom in Feb of 01, silver in Nov of 01, and the SP500 in Oct of 02. Image
In the GFC, gold and silver found their bottom in Nov of 08 while the SP500 bottomed in Mar of 09. Image
In the 2020 crash, gold, silver, and the SP500 bottomed together in mid-March. The Fed announced a monetary bazooka around this time. I don’t consider this a “real” bear market, but that's for you to decide. Image
Note: I didn’t include the 70’s and 80’s although I understand the inflationary nature of the period makes it arguably the best comp. There were some "interesting" developments in the silver market (which influenced gold) during that period. Could be more noise than signal.
My conclusion: there is a “truism” by some on FinTwit that silver and gold can't do well while stock markets implode. History suggests it's more nuanced. Perhaps everything bottoms together like 2020 this time - but if you believe this is the ONLY outcome, dig deeper.
Lastly, let’s touch on the “gold and silver aren’t inflation hedges. we’ve had inflation and they’re going down!” argument:

Note: focusing on gold for more signal over noise due to the silver oddities in the late 70’s and early 80’s. Image
10 people can look at a chart and draw 12 different conclusions, but I read this as gold sniffs out inflation well before it occurs and prices it in FAST.
It is the ultimate "buy the rumor sell the news" market. IMO, what happens here is the “smart money/time travelers” in this space hedge inflation with gold and silver by front running it, and then sell into the hype to buy assets that have continued falling.
It's very possible we see more downside in the coming months.

But, I believe this bear market ends with massive stimulus measures and structurally higher inflation. Thus, I'm starting to skate to where I believe the puck is going. I may be wrong. Do your own DD.

GLTA!
P.S. if anyone is interested in the #silver thesis, there's a space on this today hosted by @rhemrajani9.

://twitter.com/rhemrajani9/status/1569469471269752833?s=20&t=FDITpkTYI5jrjVfH9yNKRw

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More from @aschmidt2930

May 1, 2023
The #silver market has fundamentally changed due to the Mexican gov's anti-mining rules.

First, remember that according to the @SilverInstitute, silver is already in a 24% supply deficit: Image
So where does supply come from? Mexico. Image
It's worse than 23% of supply. Most PRIMARY silver mines (not copper mines where you stumble into some silver) are in Mexico.
Read 11 tweets
Feb 27, 2023
As #silver sentiment collapses again and the equities have been left for dead, let's look at the big picture.

#silver is a supply deficit play. 3 things to know:

1) 73% of mined silver is a byproduct of copper/zinc/lead/gold. CapEx is declining in 2023. /1
In other words, the companies producing silver don't care about silver. There won't be a supply response to higher silver demand.

Also, there are very few primary silver miners as AISC is about $20 and high-quality deposits are very rare. /2
As a result, silver supply peaked in 2016, driven by the 2010-2013 metals CapEx binge.

(Data from SilverInsititute) /3
Read 9 tweets
Oct 3, 2022
Time for an update on how the energy crisis is driving a new #silver bull market. For the full story, check out my original thread below.

Let's start with the supply side 👇
Zinc, Lead, and Copper smelting are very energy intensive. Energy makes up 40% of operational costs. Eurometrix estimates over 50% of capacity is already offline in Europe.

And as @LukeGromen points out, this is a BIG deal.

This is before winter. IntelliNews breaks down the situation well and suggests the shutdowns will continue:

intellinews.com/energy-crisis-…
Read 20 tweets
Sep 25, 2022
When #silver $slv miners bottom, how hard will the bounce back be? A comment by @LawrenceLepard in a space last night made me dive in a little further. Let's start with the 2020 crash:
*Note: I used Pan American Silver (PaaS) as many silver ETFs and other top current names weren't nearly as established across both time periods. Data is similar throughout the sector.

PaaS bottomed on 3/20/2020. Here's the price action in the following days:
The bounce off the bottom was over 43%. Although, a patient person, if timing the pullback perfectly (GLTA 🙃 there) could have gotten on the silver bull 22% off the low on 3/31.
Read 6 tweets
Sep 10, 2022
I've never been more excited about #silver. And it has nothing to do with the Fed or the USD. It's a story of the #oil and #gas crisis and it's 2nd/3rd order effects.

Let's start with the supply side. 73% of silver is a byproduct of Zinc, Copper, Lead, and Gold.
Smelting is energy intensive. According to @Eurometaux, half of the EU's Zinc output has already been shut off. As Zinc's smelting process separates the Silver from the ore, this is decreasing supply.

Since only 27% of Silver supply is primary,
the cure for high prices is not necessarily high prices. Silver rocketing to $50 wouldn't bring much more mine supply online (although it could incent bullion sales).
Read 17 tweets

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