The Great Silver Bull Breaks Out

The Great Silver Bull Breaks Out

welcome back everyone to the Daily gold podcast today is Wednesday May 22nd 2024 thank you so much for tuning in and today I’m very excited because we have a new guest he is Peter Kraut Peter is one of the nicest guys in this industry also one of the smartest I should add and Peter is the author of a new book the great silver poll great title I completely agree by the way and he’s publisher of the silver stock investor and Peter as we get started here I want to get your take on what you think is driving silver I mean it is selling off today but it’s had a heck of a run it’s really been outperforming gold recently touched 32 a few days ago so like from your expertise what do you think is happening in this market in the last few BS who’s buying and uh just anything you want to educate us on absolutely well thanks for that appreciate the intro and uh you know the opportunity to give my thoughts so I think silver is fallowing gold that is is a big part of what explains the the behavior recently gold has been very strong it’s been strong longer than than silver has and if you look at let’s say the last sort of year or couple of years but I think that there’s a little bit of fomo kicking in people will see gold at 23 $2,400 and they’re saying wow you know maybe I should get into gold and they then they’re thinking well all I’m getting is one ounce of gold for that kind of money um what what else can I buy silver silver is the natural alternative to that and so um people are are noticing silver and and starting to say wow for you know whatever an ounce of silver is if you’re buying uh you know a coin an American Eagle for example or a Canadian maple leaf um let’s say in US Dollars they’re looking at I don’t know for 38 40ish dollars something like that um that’s a lot cheaper than an ounce of gold so they can buy a lot of ounces of silver uh for one ounce of gold and right now if you look at the ratio you’re probably even if you’re looking at uh you know buying actual coins and bars you’re probably somewhere around maybe 70 ounces of silver for an ounce of gold so that’s a that’s a big difference and people feel like they’re getting a lot more further money and so I think that’s what’s pushing silver in a big way um but then there’s the whole industrial uh side of silver which we can get into in a lot more detail and I think that what is going on in the sil in the industrial side is really starting to drive uh demand and and and awareness as well in the silver market okay that’s great because one of my questions here is a perfect followup to that because when I’m researching the history all the biggest moves in silver were basically after gold breakout so gold breaks out as this big move and then it pulls silver higher and you know I looked at the last 10 20 years it seems like when silver goes up it’s high investment demand when silver goes down it’s low investment demand the other things don’t matter so I’m a skeptic on the industrial demand side but Peter this is why I have you on here yeah tell me tell me why I am wrong tell me why it’s going to be different now and that industrial demand is now at least moving forward is going to be a much more important Drive of the price that it has been in the past okay so I’ll agree with you that in the past and even in the future the industrial demand will have a limited effect in on the price now what I mean by that is that I I have a bit of a saying which is that that industrial demand provides a rising floor under the silver price and then it’s investment demand that kicks in and causes these these the volatility the the spikes whether they be upside or downside they are what drives the silver price in a much bigger way in a much more as I say volatile way um and I think that you know the industrial side has become more and more important uh I follow you know the silver market closely and uh if you look at 10 years ago it was barely 50% today we’re currently at about 60% of silver Demand Being industrial um solar panels are a huge part of that I think that the demand from solar is also being uh underestimated uh solar has now become 20% of all of the silver Supply silver Supply being about 85% mining 15% recycling about a billion ounces a year so over 200 million ounces of a year of silver a year go to solar panels alone and that from 2022 to 2023 grew by 64% it’s been in the last few years consistently under um under um represented or under uh how can I say too conservatively forecast in terms of the growth has been tremendous and if you look at what’s happening in technology in solar panels we’re going to just need need more silver we’re not only producing more silver more solar panels but we’re producing them in Technologies with technologies that require more silver per panel and so um yeah I mean uh we’re going to just need more and more silver for solar not to mention all of the other applications so that that’s somewhat more predictable um now what I think could be driving silver if I think that there is h a certain portion of investment demand that has started to kick in and that’s what’s Driven if you look at the silver price over the last say year or two you clearly see a hockey stick formation where it was going like this uh let’s say the top was you know 28 is and then all of a sudden it just picked right up and and just jumped and went from maybe in the last few months uh 25 26 to 32 that’s a huge jump in a matter of of weeks almost and so um I don’t think industrial demand is doing that I think investment demand is doing that that’s why I say it’s been following gold which has been breaking out to new highs uh 24 as I say is in US Dollars it’s now in a in a clear bull market because gold is in hitting is hitting all-time highs in all the major currencies that is one uh big indicator of a new bull market silver I believe the the investment side of it is following that but um I had this sneaking suspicion that um if the price of silver what felt and looked like it was capped at say 28 or $30 for the last four years almost it’s been in this range it’s a wide range but it’s 22 to 28 30ish on the upside it tested $30 Twice first in August of 2020 then in the silver squeeze in January of 2021 uh and then recently went up to 30 and it didn’t take long you know these triple tops usually don’t work work you get a breakout we had the breakout to Beyond about 32 and a half and um I think that uh part of it is definitely most of this breakout is investment but I think there’s been a big push that has has come from the industrial side now a couple of months ago I was suspicious about how you could have this ceiling on the silver price if industrial demand just keeps pushing and pushing ping and pushing forward you have the last four years we’re told we have structural deficits in the silver market how can you not have the silver price break higher in this kind of environment where you you have deficits ongoing deficits like if you add the last four years of of um silver market deficits you’re at something like 600 million ounces that’s more than half of an entire year’s supply of silver so I started looking at the future markets that have large silver inventories I started looking at um silver ETFs globally that have large silver inventories and if you look at these two um SEC what I call secondary inventories um they’re down about 45 40% overall in the last four years and so I had a suspicion that you had large industrial users getting their silver somewhere uh silver that didn’t need to be produced that was already sitting in inventory so they could actually go ahead go out and buy that silver pay um you know prevailing prices and get the silver delivered without affecting without sort of pushing up demand and pushing the silver price higher so look to me it’s it’s kind of a Smoking Gun there’s no absolute proof but to see sort of a billion ounces come out of secondary inventories in the last four years to see all the F large silver Futures exchanges drain silver to see the large to see all almost all the silver ETFs globally on balance um lose hundreds of millions of ounces um in their storage I can only imagine a lot of that’s getting consumed and going to Industry and the and that has been a source of silver without pushing the silver price higher and then you know I I thought they’re okay how long can this go on I’m I’m assuming and I’m making you know an educated guess maybe 12 maybe 24 months and it’s funny because when when I came to that conclusion about two months ago uh like about a month ago someone sent me a report by TD doing a similar analysis showing the same charts of the of the Futures exchanges of the ETFs and saying you know and I kid you not the same conclusion 12 to 24 months potentially of what we have left in this they stole they stole it from you they stole it from Hope I don’t have any proof but I I hope so perhaps I like to think so um and uh yeah they said 12 to 24 months before this the game is over and and there’s no more silver to drain from these secondary inventories and that’s it it’s it’s over someone is going to you know buy a long Futures Contract stand for delivery go to an an ETF where they hold the units and say I want delivery and someone’s going to say I’m sorry you know Force measure here you go I’m going to pay you out in cash and that’s it and and then that that you know that that that contract holder is going to scream and say no no no I don’t want the cash I want the silver I need the silver um and then we’re going to hear about it it’s going to make front uh you know front page news is going to make headlines and uh and We’re Off to the Races so that’s what I think is going on okay yeah thank you so much for that info one followup I have um I don’t know if it’s if if it’s elastic or inelastic I’m confusing my econ 101 terms but yep the because you think about uranium in the uh again is it the elasticity or in elasticity where it doesn’t make doesn’t make a huge difference to the people who need it if it’s you know $200 a pound or $50 a pound and I’m just wondering for the industrial users of silver you know 50 or $100 silver like does that make a huge difference versus the price today right so you know that’s a great point to some ENT and many applications no it will not make a huge difference naturally they don’t like it and then it eats into their profits but there’s going to be a certain amount of Tolerance and they’re going to pass on price increases in their in the price of their product to some extent because silver is a small portion of in many of its applications if you think of electronics things like onoff switches like printed circuit boards um it really is not a huge portion despite being indispensable so yes they need it um can they pass the cost on yes to some extent and I think that that’s what’s going to go on for a while we’re going to start to see some of the electronics have to pass their price increases on in from Silver um but it’s going to be when we get to a point of maybe it’s 50 maybe it’s $100 silver that they’re going to say okay you know um this is really really hurting now and um they will still have no choice uh they’ll still have to pass the price on and that and but then the consumer is going to really start to say okay that that’s that’s where I kind of you know that’s that’s my top you know I’m only so willing to pay so much for a new phone or for a tablet or for whatever it might be you know it’s it’s all over the place in an EV for example EVS use up to twice as much silver as internal combustion engine Vehicles do and so you it’s not as big as solar for example but it’s growing and uh you know at a at a 40 or $50,000 price tag on a car you can you can hide the silver price even it goes to 100 or $150 um a lot more easily than you can in some kind of small electronic uh but uh we’re get we’re we’re getting to that point it’s gonna it’s going to start to hurt that that’s really what it comes down to okay now moving on from that I I want to talk about I haven’t I didn’t mention this to you but China in dollarization so we know China’s leading the dollarization away from the dollar that’s impacting the gold market uh what kind of impact is China having on the silver market I mean does does the dollarization does that have any um in any impact on Silver like specifically aside from just the fact that it’s good for gold and it’ll pull silver higher yeah I mean I I I would say it may that that’s that’s a tough one really hard to say I have not read or heard of anything specific that does um what I would say is that there are applications and if and if you think about perhaps um you know East versus West kind of thing just to kind of simplify things if East um starts to say well we need to be self more self-reliant when it comes to all kinds of things one of the interesting aspects is um is uh defense and there are no hard numbers for good reasons because you know a lot of this stuff is top secret but you know some of the best estimates for example of one great example is a Tomahawk missile is that Tomah Tomahawk missile might take somewhere around 500 grams of silver you know per per missile so one guy um did some research on this and figures that it’s about 500 grams of silver if you look at the you multiply that by the number of missiles that the US has and then you look at the fact that they upgrade the missiles that they replace the missiles that they blow up the missiles um that uh they sell them to allies uh they can’t be the only ones that are using silver in these kinds of ways so if you you know you Circle back to the east that perhaps is saying well uh you know we’ve got our own defense uh and I haven’t even talked about all the communications aspects of Defense you know of the uh all of the Telecommunications that they use um you know they they use um tracking they use radar they use you name it all of this equipment has has to have silver because it’s such a great conductor so the West isn’t the only one uh only side using this stuff East has to be using it as well it would not surprise me if if we found out eventually that you’re starting to see some hoing going on in the East because they they are are getting concerned about having uh access to Silver supplies so I I would imagine there’s some of that going on but for sure there’s a lot of what you mentioned which is the fact that it follows gold um it’s clear that uh because the US weaponized the dollar uh central banks around the world are buying gold and that has secondary effect on Silver it’s pushing up silver as as a bit of fomo and then you’ve got like I say potentially this um you know this concern about access to supplies for for strategic uses of silver and and it’s considered a critical mineral mineral in some uh some jurisdictions so there’s certainly that aspect to is it as well uh what about just like the retail investor or the retail Trader in China and maybe I could throw India in there as well do we know anything about I mean recently do those you know individuals you again retail Traders investors I mean are they do they have an affinity for silver are they buying a little bit more I mean any thoughts you have on on that subject sure so um absolutely the East is very much uh better educated than the West is on uh on gold and silver precious metals in general there’s a big appetite um there’s a bigger appetite in in in India historically for for silver than than than in China I mean I do talk about in the book how um China was on a on you know use silver as their money for a long time and uh uh that led to all kinds of issues because um you know you had the Opium Wars and and it was currency for them uh so a lot of a lot of shenanigans happened when it when that when you consider that um the Indians as I say they’re very they have a big Affinity to Silver they’re big big consumers of silver for jewelry for silverware um they’re Savvy and sense that they buy when they feel that it’s gotten cheap when it’s backed off and they sell or they stop buying when they feel that the price has gotten a little bit rich and um you know if you look at what happened in 2022 uh they had India was a huge huge buyer of both jewelry silver jewelry and silverware and when you see what happened last year uh silver purchases from India for again both jewelry and silver were backed off tremendously and some people will say oh that’s you know that’s that’s uh bearish actually is not it’s actually closer to 2021 levels which were more normal it’s just that 2022 was such an outsized years a year in terms of silver purchases in India that it it’s an anomaly and um it’s come back more to normal uh but that just goes to show you how much um um physical buying of bars and coins of silver jewelry of silverware uh and in different parts of the world the uh East and the southeast Asians are very very silver Savvy and uh they will buy silver as a hedge a chaos hedge an inflation hedge and um I I say watch for them uh in the future to contribute to uh you know future spikes in silver price there’s no question that that’s going to come back they will be big drivers of it yeah well I mean the East I mean they know about currency depreciation much better than we do although we we are about to find out um yeah one more followup on China um so you know I see tweets about the price of silver in the Shanghai exchange it’s 35 or hit 36 it’s 34 I mean as as investors in the west I mean does that matter for us can that be a leading indicator I mean what are your thoughts on that I mean it should be we should pay attention to it it doesn’t maybe affect us directly right now but I but I do believe that pricing power is moving East uh you know East is buying precious metals they’re buying them from someone they they don’t produce all of them uh or they don’t produce all of it so sure they may be keeping a lot of what they produce but they’re also consuming a lot of it industrially as well and so they don’t get that back um but if they uh if if they’re getting beyond what they produce they’re getting a lot of it from the West so they’re being the smart ones they’re buying it we’re selling it and the more the bigger they become buyers the more they have pricing power and I believe that is definitely transferring East so if their spot prices are considerably above ours and the volumes are are are shifting towards the east we do need to pay attention because I think that that’s going to eventually be reflected in in our uh spot prices as well okay just uh couple more for you and I’ll let you go so Peter turning turning to the book um when writing the book is there something that you discovered about silver that just really surprised you there is one thing that that I had no clue about and uh and I’ve heard a couple of times since and that is that uh and this is just on the industrial side so it’s kind of I mean it’s anecdotal for us but it but it’s it’s a fact um that um they it’s called cloud seeding and a form of silver it’s some kind of oxide um is used to seed clouds and help Make It Rain basically so you can drop this product into clouds and it’ll help create rain um sometimes it’s used to help avoid rain if you want to try to get the rain to be released from clouds in a certain area so it will not rain in another area uh so yeah cloud seating you know silver is used in cloud seating which is tremendous which you know if we get better at that maybe that’s a way to help certain areas to counteract um you know things that are happening with on the climate side um um the interesting part about that too is U from what the research I did the uh the residue which is you know some some sort of form of silver uh that falls to Earth is cently um you know uh is environmentally safe so whatever they’re doing with that um the residue that falls does not affect anyone or plant or animal life or anything like that so it’s not something that we would need to be concerned with um so yeah I thought that was a really really uh interesting fact that uh you know silver can be used to to Make It Rain uh so is that being used in like desert places in North America and around the world like are they actually they’re actually using that uh cloud seating places that are really dry that like have droughts that really badly need rain I I I honestly don’t know how much how to what extent it’s being used I know that it’s been it’s something that that that they know Works um if they’re using it or not let’s say in certain places to try to counteract dryness I I’m not aware of that um like I say I don’t want to I don’t want to venture farther than what I know I I know that it exists apparently it work works and uh but the extent to which it’s being used I I I honestly do do not know okay uh yeah but that that’s super interesting um yeah this is I I hope this isn’t too similar to the last question but uh just tell us something anything about silver that we don’t know okay well um silver has been used as money uh longer than gold um from the research I yeah so so about 5,000 years so before gold was used and there was one point during I believe about uh two or maybe 3,000 years ago um there was at one point in Egypt where silver was valued equal to Gold it was um difficult or rare enough difficult enough for for the Egyptians to find silver that they valued it at the same level as they did gold so um for that reason um again the research that I’ve gathered says that over history because uh silver has been used as money for a longer time than gold and because it’s you know has has a lower value uh per per weight uh has been used in more sort of daily transactions and because of that has represented more uh transactions on a on a volume and on a on a on a value basis over history than gold has so it’s been it’s been more common money basically than gold has throughout history so it’s it’s been true everyday money for the longest time and and one sort of last point on that is that you know we’re really in an experiment uh it’s only since say 50 or 100 years that we’re on a on a true Fiat global standard that has not really happened ever before there has always been um at least somewhere in the world where you’ve had precious metals or something backing even if it’s paper money at that point in time so um you know in the US for example since say the 60s or 70s that uh there’s no physical gold or silver that’s backing uh our money that’s quite interesting so we’re living in an experiment um my guess is it’s not going to play out all that well uh so history you know if you look at history history tells us the the um the the scene and the safe way to uh to uh run and back money is with some kind of precious metals even if it’s not 100% it provides a lot of stability and uh some interesting research I came across not long ago talks about how in you know in the 19th century so in the 1800s um you had a goal step standard more or less around the world and what was interesting is that a lot of the true um true groundbreaking inventions came during that during that time period and what we’ve had you know you can look at the the 20th century and say well we’ve had all sorts of things but true sort of zero to one versus one to 100 kind of inventions where you you came with true um uh as I say groundbreaking but revolutionary ideas came in that century and came during a gold standard so it’s not because um you’ve got uh you know uh easy access to money that you cannot have uh true uh true in true invention and true uh creativity and and true Improvement basically in ideas and in living standards so we you know we we have a lot to learn Le from history there’s no question about it absolutely yeah just going back to what you said about the silver being used as money I here in the US weren’t we on a silver standard until I want to say like around the Civil War or after that point yeah in fact I think there was a bedal standard at one point as well so uh no there’s no question that silver has been part of Us’s history and then in its money you know until uh the 1970s so uh you know we have a long long long history with silver and with gold um and people just sort of need to ask themselves why uh why is that why was it uh and why and you know think about the fact that during the 1800s um when you had most of the world on a gold standard there were I’m not saying it was perfect nothing is but there were much fewer conflicts they were much shorter and they were a lot less bloody so that was because the countries on the on on the standard which was most and most you know Advanced and developed countries at the time uh had were were basically uh had their spending rained in and limited by what they were able to tax which was as I say highly limited so there was no appetite uh within their their uh citizenry to go out and you know have have long and drawn out Wars against others because that had to be funded somehow so that made for much much better peace and and a much much uh healthier and and a very very rapidly growing standard of living so as I say you know we really should look back on that and and there’s a tremendous amount to be uh to be understood and to be learned yeah absolutely Peter thank you so much for coming on today before I let you go please tell our audience uh where they can go to follow you also where they can go to subscribe to your newsletter and buy your book all right well I appreciate that um Jordan so the book The Great silver bowl uh you can find that on Amazon it’s available in print in uh in Kindle and as well as an audiobook version um so that’s easy to get to that really is the overview of silver and the opportunity in silver and I talk about everything from economics and Silver’s role in economics to you know the nuts and bolts of the silver market what drives silver and ultimately how to invest and and then eventually sell silver and silver investments because we’re going to get to a point where it’s going to run up so much that um you know you you don’t want to be left holding the bag you wan to cash in you want to benefit from it and and so I I gave you some signposts to kind of uh follow to to look for uh for when we might reach that point then there’s my newsletter which is what I feel is more of a um of a real-time way to follow the silver market so silver stockinvest.us sletter is at that website you can go there uh poke around look at that um And subscribe of course uh it’s available on a um right now it’s on a monthly or annual basis it’s going to soon switch to a quarterly or annual basis and um yeah I mean that’s how as I say to follow the silver market real time uh I put out all kinds of proprietary research on Silver uh I talk about I have a a portfolio as far as I know it’s the only newsletter that focuses exclusively on Silver it’s an entire portfolio that runs everything from physical silver and silver ETFs all the way down to uh junior explorers and everything in between you know developers large producers even royalty companies uh and all of that so um yeah that’s the best way to follow I’m on Twitter I’m pretty active on Twitter now X uh and I’m on LinkedIn so people can follow me there all right pet Peter thank you so much for coming on today and sharing your wisdom I hope we could do this again uh later this year and check back with you and see how things are developing in the silver market thanks so much Jordan I really appreciate it and uh I must say I I tremendously enjoy your work as well I think you do some fantastic stuff on technical side as well and um I encourage people to uh to follow your work thank you so much Peter pleasure thank you for tuning in to the Daily gold podcast for more interviews editorials and Analysis log on to the Daily gold.com and for premium coverage of precious metals and the best Junior mining companies visit the daily gold.com premium [Music]

Peter Krauth, author of the Great Silver Bull, and editor of the Silver Stock Investor Newsletter provides an update on the Silver market.

He believes Gold has pulled Silver higher recently and will continue to do so along with investment demand over time. However, he also notes the dwindling stockpiles of Silver and that rising industrial demand will provide Silver a rising floor, unlike in the past.

0:00 Intro
1:10 What is Driving Silver Right Now
3:35 Industrial Demand Creates a Higher Floor for Silver
11:55 Silver’s Inelastic Demand to a Certain Level
14:25 Any Impact From DeDollarization
17:35 China & India Retail Demand
20:25 Price of Silver is Higher in China
21:50 Surprising Fact About Silver
24:20 Silver Has Been Money Longer than Gold
28:15 Silver was part of US Monetary System
30:00 Peter’s Book & Newsletter

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