The rush to silver is on

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by Tom Lewis, Gold Telegraph:

Highlights: 

  • In USD terms, the silver price is up nearly 27% this past month
  • Record inflows into silver ETFs 
  • Sprott Silver Trust to purchase $1.5 billion of physical silver, representing 8.8% of annual production globally 
  • Mexico accounts for 28% of global silver production and many mines have been disrupted due to the coronavirus 

  • Silver institute earlier this month said they expect a drop in silver mine production of 7% for 2020 

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” ~ Norm Franz

It has been quite a month for silver as we have witnessed some parabolic days in the space. In USD terms, the silver price is up nearly 27% this past month.

Silver has been long used in jewelry, coins, and electronics. It has the highest electrical conductivity of any metal and is, therefore, an industrial metal due to its wide range of use in different applications.

On top of its industrial demand, silver is framed to be the gold’s little brother. When gold tends to perform strong, silver typically follows. People will increase silver exposure for wealth preservation in times of uncertainty, which now seems apparent today. With fiscal and monetary policy out of control, and bond yields continue to head lower, market participants are desperate to preserve capital.

The gold to silver ratio is always a ratio worth watching. The lowest level this century for the ratio was 32:1 in 2011. At the time of this writing, the ratio is 83:1.

Silver ETFs are currently witnessing record inflows, the Global X Silver Miners exchange-traded fund (SIL) posted its ninth straight day of inflows, the longest streak on record, according to data compiled by Bloomberg.

Holdings in ETFs backed by silver are at a record high: 

At the same time, a bombshell came about earlier in the week as it was announced that Sprott Silver Trust would purchase $1.5 Billion of physical silver, representing 8.8% of annual global production!

This purchase puts the already strained physical silver market in a much deeper corner as supply shocks are set to persist for the remainder of the year due to mine closures due to the coronavirus. 

The Silver Institute reported earlier this month that global silver mine production is forecast to dip by 7 percent in 2020 even though most mining operations are now back online.

With less supply available and investors flocking to gold due to its always history of being a reliable store of wealth, silver will follow in gold’s footsteps. 

It is worth watching the silver to gold ratio closely these next few weeks. 

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