The open interest in the December trading contract, which matures in 17 trading days, dwarfs the available inventory on the exchange. So it will be very interesting to see how this situation unfolds. When you put that into the context of the fact that silver is now trading dramatically below what it takes to extract an ounce from the ground for a pure silver producer, it really demonstrates the absurdity of the situation.
With a price that has been under so much pressure, this would normally suggest that silver demand has been weak and the market is being overwhelmed by supply, but that’s not the case. The demand for silver coins from the U.S. Mint has risen dramatically and there has been continued demand from the industrial side, which takes up the lion’s share of supply.
People have to remember that in the aftermath of World War II there were massive inventories of silver in the world. And following the Hunt Brothers attempt to corner the market in the 1970s, above ground inventories remained huge. But all of these above ground inventories have been absorbed as physical demand has outstripped mine supply for many, many years.
Also, the majority of silver mine supply comes as a result of base metals mining. With the world now moving inexorably toward a recession/depression, and with excess supply everywhere, the demand for base metals is going to decline sharply. This will curtail production and mean there will be less silver byproduct.
So I see an extremely positive supply/demand situation building here at a price that is remarkably discounted for silver. What doesn’t get discussed is the fact that not too long ago roughly 1/3 of the industrial demand for silver was related to photography. But all of that demand from photography has disappeared and been replaced by solar demand, medicinal demand, etc.. And these new sources of demand continue to grow well beyond what we used to see from photography.
But because the paper manipulation is beyond remarkable, silver remains as undervalued an asset as I have ever seen. As an example, in the last 135 trading days the silver price has declined in the thinly traded access market 130 times at the open. So to be clear, in the early hours
This is purely manipulation
Sadly the Western governments and central banks have failed their citizens and are now trying one last time to keep things afloat.
- Source, John Embry of Sprott Global via King World News