Silver SITREP: Data Shows Increasing Shortage + Video Interview
Silver is under stress due to physical demand resulting in an increasing price over the past weeks.
As we head into decreased production of byproduct silver from base metal mines (60% of annual global silver production) in the months ahead due to a growing global shortage of sulfuric acid as Persian Gulf production has been suspended. China, Russia, and Japan have suspended sulfuric acid export in the past weeks compounding the problem.
Copper is now at all-time high prices and the growing implied lease rate for silver indicates increasing physical silver shortage stress once again.
Figure 1 - London Implied Silver Lease Rate; source: Bloomberg / @KarelMercx x.com
After 40 years of increasingly inflationary central bank monetary policy, the industrialized world is heading into a period of increasingly intense price inflation and increasing interest rates as capital will ultimately flee stocks and bonds that have been so grossly inflated with this secular loose monetary policy.
To help protect the bond investment principle from currency debasement, the financial industry promotes Treasury Inflation-Protected Securities (TIPS) that are Treasury bonds with an inflation escalator.
Below we can see how TIPS have performed relative to silver since 2018. TIPS performance vs. gold is much the same.
Buying and holding bullion that has no counterparty risk looks interesting.
Following is an interview recorded today with Elijah Johnson of Finance & Liberty regarding silver and factors currently driving its increasing global shortage.
Best regards,
David Jensen
And the "markets" seem to be (pretending to be as an excuse?) misunderstanding the difference between inflation and rates. Building on David's thesis herein, the issue is REAL rates not nominal rates. Does anyone think that rates are going up to 6 or 7% to match inflation? And even if they did the real rate would be zero. And at those levels USG would quickly enter a financial crisis because interest on the debt would become untenable. So the entire argument against PMs is fake as usual and it's clear that "someone" is behind it. And that doesn't even factor in the shortages of metal both already and looming further as the Iran war goes on without any obvious end.
Great job David.