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 π
Let's start with the supply side π
https://twitter.com/aschmidt2930/status/1568615521368608776
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.
And as @LukeGromen points out, this is a BIG deal.
https://twitter.com/LukeGromen/status/1576929861910028290?s=20&t=Y5L7DeKIBeJkEdgwvmOJBg
This is before winter. IntelliNews breaks down the situation well and suggests the shutdowns will continue:
intellinews.com/energy-crisis-β¦
intellinews.com/energy-crisis-β¦
About 20% of silver supply comes from recycling. While I'm struggling to find tangible data on this year's production (many smelters also recycle, however), it's a safe bet to say that when price drops and energy costs increase, output decreases.
The #copper market may support this thesis. Many have been surprised by the continued inventory drains. @PauloMacro has been covering this closely. As about 60% of annual supply is recycled, it's possible that recycling margins are squeezing both metals.
https://twitter.com/PauloMacro/status/1567967702886776832?s=20&t=Y5L7DeKIBeJkEdgwvmOJBg
Next, let's talk refining. 12 of the top 16 #gold and silver refineries in the world are based in Europe. 70% of production comes out of Switzerland alone π€―
swissgoldsafe.ch/en/additional-β¦
swissgoldsafe.ch/en/additional-β¦
While I haven't heard much in the way of shutdowns here, it's plausible it happens this winter.
I would be VERY conscious of where your gold and silver miners send their ore. If this plays out, not all miners are going to participate in this run.
I would be VERY conscious of where your gold and silver miners send their ore. If this plays out, not all miners are going to participate in this run.
TL;DR - the supply situation is bad and getting worse.
Let's talk demand.
#solar, the largest industrial usage of silver by far, continues to get government funding around the world. And solar stocks are going crazy.
Let's talk demand.
#solar, the largest industrial usage of silver by far, continues to get government funding around the world. And solar stocks are going crazy.
This type of disconnect just doesn't happen in a bear market unless someone knows the orders and/or future stimulus plans.
And it's not just the industrial side - investment demand is accelerating.
And it's not just the industrial side - investment demand is accelerating.
According to @mikesay98, APMEX inventories are falling fast.
https://twitter.com/mikesay98/status/1576950938828316674?s=20&t=32uU1M3JsjQ0KAYCQx0atw
While inventory across the COMEX, LBMA, and even the Shanghai Exchange is dropping fast:
https://twitter.com/GlobalPr0Tradar/status/1575173895761821698?s=20&t=32uU1M3JsjQ0KAYCQx0atw
While we're seeing inflows from SLV:
September : +$297.35 million
August: -$342.35
July: -$1,088.95
Seeing a trend?
September : +$297.35 million
August: -$342.35
July: -$1,088.95
Seeing a trend?
The reason this is so fascinating is that silver is a Veblen Good. In other words, as the price falls, investment demand tends to fall. As the price rises, demand rises.
I believe this is the legacy of the #silversqueeze movement largely driven by @WallStreetSilv.
It's not about "squeezing" the COMEX in the short term with retail products. It's an ideological shift by regular people around the world who want to move a portion of their
It's not about "squeezing" the COMEX in the short term with retail products. It's an ideological shift by regular people around the world who want to move a portion of their
hard-earned wealth out of a financial system that doesn't serve them.
There's a new generation of "stackers" who buy because it's payday and will continue at any price.
Over time, this will increase mint capacity and drive futures contract demand.
There's a new generation of "stackers" who buy because it's payday and will continue at any price.
Over time, this will increase mint capacity and drive futures contract demand.
And while the commercial banks have a small short position, it's so small you can more or less consider them neutral.
And, all of this is starting to be reflected in markets:
And, all of this is starting to be reflected in markets:
It's too early to schedule the parade, but silver stocks and the SP500 may be disconnecting. And, this wouldn't be a surprise. It's common bear market behavior.
https://twitter.com/aschmidt2930/status/1570055835673366534?s=20&t=32uU1M3JsjQ0KAYCQx0atw
There's also an unconfirmed rumor going around that @contrarian8888 is doing a quarterly rebalance of $aapl puts into $slv* ππ
*A joke, people :)
**Probably
*A joke, people :)
**Probably
So, what's next? I have no idea. Predicting the day-to-day in the silver market is a fool's errand. This ride is unlikely to be smooth or for the faint-hearted. But, the "Great Silver Bull" (h/t @peter_krauth) is just getting started and has a highly likely destination. π
If you're interested in talking more about silver, I'm doing space tonight. Just for fun. Join if you want.
GLTA!
twitter.com/i/spaces/1LyxBβ¦
GLTA!
twitter.com/i/spaces/1LyxBβ¦
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