Your Ideal Scenario For Silver Above $30 An Oz.

[Recyclersteve]

There are lots of threads on this fine site about silver. Now that it has broken above $30 and is the highest it has been since 2011, I thought it would be nice to create a thread discussing what our ideal scenarios for silver would be.

In 1980 when silver surpassed $50 (when the Hunt Bros. tried to corner the market) and in 2011 when silver got oh so close to $50, it never stayed above $50 for long and came down very quickly and sharply shortly thereafter.

Here is my ideal scenario and I'm using my knowledge of stock charts (technical analysis if you will) to aid in my comments.

I'd like to see silver get above $50 and run to perhaps $53-55 before pulling back. Ideally, I'd love to see silver find solid support in the $48-50 range and trade perhaps between 48 and 55 for perhaps 3-6 months. Then a second breakout above $55 (with high volume on the SLV exchange traded fund and at least 2 consecutive days of higher highs) would likely take silver to somewhere between $75 and $100/oz. Adjusting for true inflation, that STILL would NOT be an all-time high. $50 way back in 1980 would likely be $150-200 nowadays.

What are your thoughts? I know, some people will likely say fantasy stuff like "I just want to get rich" or "$1,000 an ounce", but I am interested in sincere commentary on this subject.

[JerrySpringer]

I'd be glad if it holds above $30 through the rest of the year and just keeps climbing with all the other inflationary prices ( consumer goods, houses, services, stock market, etc.). The SHEET or get off the pot phase with silver has to end. Wonder how premiums will start being scalped if we get near $50 in the next years.

[68Camaro]

I have always believed silver would stairstep up to $100+; it has just taken longer than I thought. (In 2012 I was 95% sure this would happen by 2020.) The 1980 price was irrational exuberance, in many ways not a "real" price. I think that's also true of the 2011 price, but less irrational - I think a rational price in 2011 was $35, but then several things happened, one was market manipulation, and the other was resale recovery where existing silver holders who had bought in at low prices were willing to flood the market, which drove the price down further. This all had to shake out over a period of several years. Production has been below the market for several years, which haw been putting pressure on prices. Lacking a new global demand killer like Covid, I think production supply will remain below demand from here on out. More later...

[Lemon Thrower]

I have a little bit more to sell over the coming months. Will be happy if it holds $30

(i'm planning to leave the U.S. so carting around silver and copper is just not going to be possible. Moving homes and traveling makes one appreciate how important portable money is).

[Cu Penny Hoarder]

Blast off! Asian market (especially China) is now dictating the price. COMEX and LBMA are losing control.

[pmbug]

Silver is in a structural deficit where mining production + scrap recycling is less than industrial demand (not even counting investment demand). We are in the fourth year of this deficit and the deficit is growing as industrial demand has grown. The structural deficit is draining the LBMA + COMEX of their vaulted stocks. The run rate for the remaining vaulted stock appears to be somewhere between 2-10 years depending upon what numbers you look at and what assumptions you make about mining production (fairly fixed - ramping up production takes years), industrial demand (growing but at what rate? is it sensitive to a recession?) and investment demand (ETFs hold a lot of vaulted metal too - will folks sell or buy?).

I don't think technical analysis is currently very helpful in forecasting price action for silver because the current price action is no longer being dictated by the futures markets here in the West. China and India are buying physical and driving the bus currently. Unless China's economy implodes (which it very well could), I think silver is going to continue to run.

Last I heard, new silver supply is currently mined at a rate 7:1 versus gold these days. The GSR has a long way to go to reach that equilibrium should market demand for silver remain strong, but I think that is likely the real ceiling for where silver could run once vaulted stocks at the LBMA + COMEX are depleted in a few years,

... the market is headed for a fourth year in deficit, with this year’s shortage seen as the second biggest on record.

That’s led industrial users — which typically rely on miners for supply — to seek ounces by draining the world’s major inventories, according to Silver Bullion’s Gregersen. Stockpiles tracked by the London Bullion Market Association fell to the second-lowest level on record in April, while the volumes at exchanges in New York and Shanghai are near seasonal lows.

Over the next two years, the LBMA stockpiles may be depleted given the current pace of demand, according to TD Securities. ...

https://finance.yahoo.com/news/hot-comm ... 19816.html

[pmbug]

Forgot to add - a GSR of 7 implies a silver price of ~$345 at gold's current $2420. Silver won't get there in a straight line or immediately, but that's a realistic neighborhood over the next 3-4 years if the global economy doesn't implode (and disrupt the current demand drivers).

[Lemon Thrower]

GSR of 7??? It will never go below 15 and even 15 is a pipe dream.

Silver is roughly 15-16 times as abundant as gold in the Earth's crust.

The Coinage Act of 1792 defined a dollar in terms of gold and silver at a 1:15 GSR.

The PTB demonetized silver in the late 1800s, and gold in 1933. Since then, the peak GSR was about 1:15 at silver's peak in 1980.

[pmbug]

The estimated global production of silver in 2023 amounted to 26,000 metric tons.

https://www.statista.com/statistics/253 ... worldwide/

Approximately 3,000 metric tons of gold was produced from mines worldwide in 2023

https://www.statista.com/topics/1204/go ... icOverview

According to those numbers, in 2023, silver was mined at a 12:1 ratio to gold. I have seen other people mention that silver is being mined at 7:1 presently. The Statista numbers likely include everything - including mining production from places like China that do not get sold on the open market. I don't know what the exact ratio is today for silver/gold production that makes it to the open market, but it seems to be much less than 15:1. Bear in mind that prevalence in the crust/earth <> ability to mine.

Again, my comments were predicated on the LBMA + COMEX vaults being drained and the current supply deficit continuing. It's been happening for 4 years now, so I think it's safe to call it a trend.

[Lemon Thrower]

current mining is like 1% of the puzzle. You have to look at all of the mining throughout history because most gold and silver is not consumed or destroyed. Some silver is used in industry but a good portion of it gets recycled.

[pmbug]

According to the SilverInstitute, silver recycling accounted for 18% of total supply in 2023:

https://www.silverinstitute.org/scrap-supply/

Mining production was 82% of the puzzle in 2023.

[Lemon Thrower]

Yes but that is 'new' supply. Silver mined 200 years ago is still around and is part of the supply. Just like every stock on the stock market is basically re-sales of previously issued shares; new share offerings are quite the exception.

Look at a long term chart of the GSR. I challenge you to find a time it was every below 15. Even in 1980 it got to 15 and stayed there only briefly.
https://www.macrotrends.net/1441/gold-to-silver-ratio

[pmbug]

You need to look back before the Federal Reserve was created to find that data:

https://elements.visualcapitalist.com/c ... 200-years/

[silverflake]

Historic GSR. Got this from Seeking Alpha.

[Lemon Thrower]

I’m having trouble reading the left hand axis. What year was it below 15?

[pmbug]

From the link I posted previously:

...
The earliest recorded instance of the gold-to-silver ratio dates back to 3200 BCE, when Menes, the first king of Ancient Egypt set a ratio of 2.5:1. Since then, the ratio has only seen gold’s value rise as empires and governments became more familiar with the scarcity and difficulty of production for the two metals.

Gold and Silver’s Ancient Beginnings

Ancient Rome was one of the earliest ancient civilizations to set a gold-to-silver ratio, starting as low as 8:1 in 210 BCE. Over the decades, varying gold and silver inflows from Rome’s conquests caused the ratio to fluctuate between 8-12 ounces of silver for every ounce of gold.

By 46 BCE, Julius Caesar had established a standard gold-to-silver ratio of 11.5:1, shortly before it was bumped to 11.75:1 under emperor Augustus.

As centuries progressed, ratios around the world fluctuated between 6-12 ounces of silver for every ounce of gold, with many Middle Eastern and Asian empires and nations often valuing silver more highly than Western counterparts, thus having a lower ratio.

The Rise of the Fixed Ratio

By the 18th century, the gold-to-silver ratio was being redefined by the U.S. government’s Coinage Act of 1792 which set the ratio at 15:1. This act was the basis for U.S. coinage, defining coins’ values by their metallic compositions and weights.
...

[Cu Penny Hoarder]

All anyone really needs to know is that silver is extremely undervalued.

It hasn't kept with inflation at all, that's because the price has been deliberately held down for decades.

Should be somewhere over $200oz by now. I believe it will someday, but we have to be patient. It's been very frustrating I know.

[68Camaro]

All anyone really needs to know is that silver is extremely undervalued.

It hasn't kept with inflation at all, that's because the price has been deliberately held down for decades.

Should be somewhere over $200oz by now. I believe it will someday, but we have to be patient. It's been very frustrating I know.

Agree. One can make a good argument that gold is (especially after the recent run) not undervalued (or only somewhat) but based on that same inflation/value-based argument silver should be worth at least $150. I expect several large corrections (and this doesn't consider a possible whole market collapse), and the last one will overcorrect due to FOMO to the $250+ level. When you see that, it might be time to rebalance at least partly out of silver to something else that is tradable but undervalued.

[Cu Penny Hoarder]

All anyone really needs to know is that silver is extremely undervalued.

It hasn't kept with inflation at all, that's because the price has been deliberately held down for decades.

Should be somewhere over $200oz by now. I believe it will someday, but we have to be patient. It's been very frustrating I know.

Agree. One can make a good argument that gold is (especially after the recent run) not undervalued (or only somewhat) but based on that same inflation/value-based argument silver should be worth at least $150. I expect several large corrections (and this doesn't consider a possible whole market collapse), and the last one will overcorrect due to FOMO to the $250+ level. When you see that, it might be time to rebalance at least partly out of silver to something else that is tradable but undervalued.

Absolutely!

Also, I predict many people who FOMO'd the 2011 rally and bought in the $40's will be selling at the point in order to break even (although it's not breaking even when you factor in inflation).

Future inflation is going to continue to weigh on people, pressuring them into selling their PMs. That's already happening... weak hands are dumping PMs to pay bills.

Unless we have a total market/USD collapse, the $50 level is probably going to be a tough resistance point to break out of.

[68Camaro]

Agree again that $50 silver might present a challenge, unless it happens simultaneously with a USD crash from say 100 to 80 (or less).

I was a "2011 FOMO buyer" that continued to buy into the 40s. Hindsight is 20/20 but at the time I was concerned (for good reason) that the entire global economy was going to crash, and that I hadn't bought enough silver when it was cheaper. I had too much (I thought) in cash and securities and not enough PMs. I did what I did for good reason but bought too much over-expensive silver; should have bought less of it at the time and bought more of something else stable (perhaps gold). So I spent the next 10 years buying cheap silver at 11 to 18 to DCA my average price down to something sustainable as prices readjusted. I finally got my silver portfolio above water 3 years ago. I did stay the course and remained with my convictions that it was a good item to have, so bought large quantities in the low to mid teens, even though I was badly underwater for a few years. It has worked out in the end; fortunately I had the time to do it.

[pmbug]

...
Unless we have a total market/USD collapse, the $50 level is probably going to be a tough resistance point to break out of.

The price right now is being driven by China, not the US markets. China (SFE/SGE) is currently paying $4+ premium over the West's spot price. As long as they maintain that pace of buying (a >10% premium over the West), silver should continue to rise.

[Cu Penny Hoarder]

...
Unless we have a total market/USD collapse, the $50 level is probably going to be a tough resistance point to break out of.

The price right now is being driven by China, not the US markets. China (SFE/SGE) is currently paying $4+ premium over the West's spot price. As long as they maintain that pace of buying (a >10% premium over the West), silver should continue to rise.

The COMEX and LBMA criminals are still doing their best to knock the price down everyday.

[silverflake]

Lemonthrower, the left hand axis date is 1687 and if I am reading it correctly, the ratio hasn't ever gone below 15. But I may be wrong...it has happened.

Regardless, keep stacking.

[Lemon Thrower]

Just to be Devils advocate . . .

A GSR of about 50 is reasonable. That gets you close to $50 today.

I think in 2011 the GSR got as low as 38. That gets you to $63.

GSR is curreently around 76. It might get to 50. I don't expect it to go to 38 let alone 15 or 7. In 2011 you had the ETF come on line I think. 2011 levels are possible but not likely imho.

[Cu Penny Hoarder]

The criminal price manipulators are taking it back down to $30. I hate these phuckers!