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
#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
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
(Data from SilverInsititute) /3
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
https://twitter.com/PauloMacro/status/1621012147919794177?s=20
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
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/…
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
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
I think there's a heck of an opportunity setting up again, just as there was in August. /9
https://twitter.com/aschmidt2930/status/1568615521368608776?s=20
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