Austin Schmidt Profile picture
Feb 27, 2023 9 tweets 4 min read Read on X
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
2) Silver supply is incredibly concentrated in three countries. /4

statista.com/statistics/253…
Peru isn't exactly stable. Production was down 7.6% in 2022 and we've seen quite a few operational suspensions in 2023. Rather than walk through all of them here, read this: /5

3) Industrial demand is growing quickly and has secular tailwinds (cough cough gov stimmies) .

EVs use about 1.5 oz/car (avg .8 oz for ICE). The growth rate is insane. (ev-volumes.com) /6
Solar is also growing like crazy and many in the space indicate we've reached the limit of thrifting (using less ag/panel) and that the new tech in China actually uses more silver. /7

nrel.gov/docs/fy23osti/…
And so many more. EV chargers? Phones? TVs? 5G? Silver.

Summary: Industrial demand has secular tailwinds and supply doesn't have an effective supply response.

While the DXY and interest rates may cause speculators to dump some contracts, they are sideshows. /8
Sure, there's a monetary call options here. But the real thesis here is supply deficit driven, IMO.

I think there's a heck of an opportunity setting up again, just as there was in August. /9

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Austin Schmidt

Austin Schmidt Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

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
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 14, 2022
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
Read 12 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

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(