- Discover why silver is the most undervalued commodity on the planet
- Discover why the price of silver will rise to three digits and could easily reach four digits
“Silver is an industrial metal.”
This was never true. Arguably, it is one of the greatest Market Myths in history.
It is also a malicious lie. It has been the primary reason/excuse that has facilitated the price of silver being driven to historic lows.
The culmination of this myth (and insanity) occurred during the worst of the panic in markets as COVID-19 broke out. At that time, the gold/silver price ratio hit an all-time extreme of 125:1.
Silver has been the most under-priced commodity on the planet for over 30 years. The only exception to this also occurred during the COVID-19 panic, when (due to storage issues) the price of crude oil was briefly driven to negative numbers.
To understand why silver is the greatest opportunity in commodity markets today requires both a lesson in history and a lesson in economics.
This will allow readers to discover why
a fair-market price for silver today is at least $200 per ounce. And a strong argument can be made that the price of silver should be over $1,000 per ounce – today. Not less than $30/oz.
The history lesson
For as long as human commerce has existed, gold and silver were priced at ratio of ~15:1 -- until the last century.
Why did that price ratio remain intact for over 4,000 years? Because it reflects the natural supply ratio of the two metals.
Gold and silver exist in the Earth’s crust at a ratio of approximately 17:1. Silver is actually a more brilliant metal than gold. This is why it is a superior material for solar panels.
For over 4,000 years (relative to supply), humanity has had a slight preference for silver over gold: a 17:1 supply ratio, but a 15:1 price ratio.
For as long as human commerce has existed, gold and silver have been
real money.
Gold exists in the perfect scarcity (abundance) to be the Money of Nations – and the wealthy.
Silver exists in the perfect abundance (scarcity) to be the Money of the People – and day-to-day commerce.
Gold and silver are humanity’s best forms of money. Eastern populations have always known this. (Propaganda-blinded) Western populations are now rediscovering this.
As
faith in the U.S. dollar (and other fiat currencies) crumbles, gold and silver are reasserting their status as humanity’s premier monetary assets.
We see this reflected by soaring prices for gold and silver.
We see this reflected by the soaring demand for gold and silver – as monetary assets.
The economics lesson
Silver has always been money. It remains money today, particularly in Eastern cultures.
So how did the myth originate that (somehow) silver had morphed into “an industrial metal”?
Pure Machiavellian semantics. It goes like this.
Not only is silver more brilliant than gold, it is also more useful (industrially) than any base metal. Thus as the Industrial Revolution led to the rise of industry, more and more of the annual supply of silver was siphoned off for industrial uses.
In other words,
silver was becoming even more valuable: superior money
and a superior input for industry.
But
the Silver Haters perverted this reality in the Western world. They invented the myth that silver was now (only) “an industrial metal”.
Based entirely on this myth, the price of silver was driven lower and lower.
The price of silver reached a 600-year low (in real dollars) during the 1990’s. And in real dollars, silver has remained near that historic low until today.
The Silver Haters
Who are the Silver Haters?
- The Silver Users
- The Big Banks
- The central banks
Why do they “hate” silver (i.e. want to drive the price as low as possible)? Each has a very powerful motive.
Silver Users (the industrial consumers of silver)
- Because silver is an important input in their manufacturing, the lower the price of silver, the larger their profit margins on consumer goods
Big Banks
- Gold and silver have traditionally been significant passive components in investment portfolios (~10%), but the Big Banks can’t make any money on that
- By driving the price of silver to historic lows, it creates the myth that silver is no longer a Safe Haven asset
- Investment dollars that previously went into silver have been diverted into buying the Big Banks’ “financial products”
Central banks
- The producers and distributors of “fiat currencies”: currencies with no intrinsic value that always collapse to zero over time – a monetary fraud
- Gold and silver are real money and the most formidable competition for fiat currencies
- By suppressing the price of silver and gold, central banks undermine demand for gold and silver and increase confidence in their own (worthless) fiat currencies
This Unholy Trinity (along with mainstream media drones) began promoting the myth that silver was an industrial metal.
Somehow, silver was supposedly no longer “precious” even though
the supply remained unchanged and demand was increasing.
Totally absurd.
Silver is MORE precious than ever
The Western world is rediscovering what the Eastern world has always known: silver remains (along with gold) humanity’s best form of money.
As central banks crank out their fiat currency confetti at hyperinflationary rates, confidence in these worthless currencies is crumbling. Consequently,
Western demand for silver as a monetary asset has suddenly skyrocketed.
Meanwhile, silver remains just as important to industry.
Note that silver has extremely potent metallurgical and chemical properties. This means that many of its industrial applications only require minute quantities of silver (in billions of consumer products).
This means that the price of silver can soar by several multiples without seriously impacting industrial demand. In economic terms, silver is price inelastic.
It can
simultaneously be “precious” in industry and as money.
Knowing the history and understanding the economics, this is what I wrote as silver hit its all-time low versus the price of gold in March.
Silver Starting To Bounce?
Here’s one more reason why investors may not want to dismiss the late-week bounce in the price of silver as merely “a blip”. The gold/silver price ratio.
Earlier this week, that ratio hit an all-time extreme of
over 125:1. This compares to the historic price ratio (over a span of 4,000 years) of 15:1.
When bullion markets are in genuine “rally” mode, silver always outperforms gold. The gold/silver ratio as of market close on Friday? 119:1.
Stay tuned.
Less than a week later – with the price of silver at $15 per ounce – I wrote this.
Silver Market: Final Countdown to Price Explosion
The coming mega-bull market for silver (now underway?) will not be an overnight event. It will be a multi-year paradigm shift in the silver market.
It takes nearly a decade for the mining industry to fully respond to higher prices – the time it takes to bring a new mining discovery to production. Some advanced-stage silver projects can be brought online sooner. Even so, any significant supply response to higher prices is several years away.
In the meantime, decoupling (and potential default) implies
extreme spikes in the price of silver, well above the equilibrium price of $150 per ounce.
A four-digit silver price is not at all out of the question.
Why is “a four-digit silver price not at all out of the question”? I explained that earlier in the same article.
Today,
4,000+ years of accumulated silver stockpiles are gone. Silver is currently only being mined at a 9:1 ratio versus gold. Market equilibrium today dictates a fair market price for silver at a ratio of no more than 9:1 versus gold (and arguably even less).
Gold is currently priced at $1616 per ounce, but (like silver) at that bargain-basement price, inventories of physical gold have also dried up.
Much higher gold prices are expected.
This implies a fair market price for silver today of
well over $150 per ounce – and rising.
Don’t listen to the mainstream myth that silver is now “an industrial metal”. As noted in
another recent article, India imports nearly 1/3rd of the world’s silver alone, and the vast majority of that silver is to meet monetary demand.
In India, the world’s premier precious metals market, silver always has been (and always will be)
a precious metal.
Note that restoring sustainability to the silver market (i.e. eliminating the supply deficit) will require many years of higher prices, maintained at these much higher levels.
Read the entire article to find out
how “4,000 years of accumulated silver stockpiles” have literally been consumed.
The silver price spiral has finally begun
The world has run out of silver. As noted above, silver mine production is extremely depressed because of the artificially low price for silver. And it will take close to a decade to produce a strong supply response from the mining industry.
For the better part of a century, the Silver Haters have had things all their own way. Now they have backed themselves into a corner – on every front.
The Silver Users have no supply.
The Big Banks' financial markets are drying up.
The central banks’ fiat currencies are crumbling in an orgy of hyperinflationary money-printing.
Is silver going to a new nominal high (above $50/oz)? That is no longer a serious question.
I
s silver going above $100/oz? This is a certainty.
Is silver going above $1,000 per ounce?
The price of rhodium (another precious metal) soared as high as $11,500/oz recently, due to scarcity. The world has run out of silver and silver has much greater demand (and importance) than rhodium.
A four-digit silver price would be very reasonable, given that a number of informed silver analysts believe there is
more gold in the world today (above ground) than silver.
Remember: relative to supply humanity has always had a slight preference for silver over gold.
In the extreme squeeze that we are likely to see in the silver market, (like rhodium) a temporary spike to five digits cannot be ruled out.
The small number of silver miners that still exist will
leverage these gains in the price of silver. Leading producers like
First Majestic Silver (US:AG / CA:FR) and
Silvercorp Metals (US:SVM / CAN:SVM) should be core holdings for precious metals investors.
Junior silver exploration companies that develop large deposits of silver could be not merely ten-baggers but
potential hundred-baggers.
Rediscover silver.
The price of silver has risen by 50% just in the last month. That performance leaves even the NASDAQ bubble-stocks in the dust. And unlike NASDAQ bubble-stocks, the silver market is backed by real value – not propped-up with Federal Reserve confetti.
Rediscover silver. Rediscover investing.
DISCLOSURE: The writer holds shares in First Majestic Silver and Silvercorp Metals.
