Silver Prices Becomes Increasingly Volatile To The Upside - Production Impaired Globally

Silver’s price has jumped in a volatile fashion over the past week - something’s rumbling in the silver market.

With respect to the market availability of silver, the following interview of Peter Carlin hosted by my friend Mario Innecco of the Maneco64 YouTube channel is very interesting listening.

Carlin co-wrote ‘A Pocket Book of Gold’ with Jim Sinclair in 2010.

Carlin covers two essential matters:

1. Sovereign debt default rearing its head in the UAE and other Persian Gulf countries that have seen their revenue dry up as their shipments of commodities (oil, gas, sulfur, nitrogen fertilizer/urea, etc.) have dried up due to the Iran war;

2. Approaching disruption to silver byproduct production from copper mines themselves being disrupted as sulfuric acid availability to these mines is currently disrupted globally.

Persian Gulf production accounts for 20% of the world’s sulfuric acid supply and 40% of the world’s elemental sulfur production. China and Japan have now suspended their sulfuric acid exports leaving copper producing countries like Chile (24% of global copper production) in the lurch as the electrowinning process used in producing copper depends on the use of sulfuric acid.

Sulfuric acid shortage at copper mines impacts the production of silver as 26% of global silver production is sourced as a byproduct from copper mines.

An additional 33% of global silver production is sourced from other base metal mines (lead, zinc, etc.) where sulfuric acid is also used as a lesser reagent in flotation recovery mills.

In the following video, UAE sovereign wealth default is discussed starting at 19:00 minutes.

Of particular interest to silver investors is the discussion, starting at 27:00 minutes, regarding the globally disrupted silver supply as a consequence of the disruption of sulfuric acid supply.

As a trading compact, Canada, Mexico, and the US are self sufficient in sulfuric acid production however, they are not self sufficient in petroleum-based lubricant supply also necessary for mine operation.

The following words from the interview resonate: “… If those companies running mines… … can’t get their hands on sulfuric acid, how are they going to get the silver to the market. The stackers are ahead of the game again. … …It just shows you: You’ve got to have something in your hands and the stackers have done it again. …”

Silver and gold have value not just because of looming shortage from global production disruption but the fact that, in a world of increasingly impaired financial market assets, these assets when directly held, are doubly valuable as they are no one else’s liability.

With 2+ billion oz. of silver sold into the London cash market for immediate metal ownership and delivery on demand, it will be interesting to see where the silver going to come from when bar delivery is demanded.

Best regards,

David Jensen