the structural deficit is real, and continues. demand/consumption exceeds annual global mined production.
there are no effective substitutes for silver in many industrial applications.
supply is inelastic.
new silver mines take about ten years from discovery to production.
primary silver mines are quite rare.
seventy percent of silver is produced as a byproduct of other mining activities. a copper miner whose silver byproduct gives him three percent of his revenue stream will not increase production
if silver prices only double or triple.
silver, though expensive, is used in small quantities per unit of product. there is a small quantity of silver in each smart phone. even at $100/toz, there’s less than a dime’s worth in a $1000 phone.
wide dispersion makes recycling difficult at best. there are several kilos of silver in each cruise missile (mostly in the batteries). none of it is recyclable. other uses are not much easier to recycle.
purchasing departments for industrial users REALLY don’t want to have to explain to upper management that the $multi million (billion?) production line has to shut down because the price of
silver is too high. it’s anybody’s guess how high they will pay to avoid this. (guess high, then add 35%.)
march deliveries are coming. there are four ounces sold forward (shorted) for every deliverable ounce in the comex warehouses. even if they manage to patch something together to squeeze
through march deliveries (much pissing and moaning, many corporate oxen being gored), there are subsequent delivery months.
scrap and junk being squeezed “out of the woodwork?” there’s some out there. hard to tell how much, but however much there is, it’s finite. there’s a lot less than there was before the hunt
bros. price spike of ’80 (and less still after each subsequent price spike). granny can sell the family sterling silver, but she can only sell it ONCE.
the last couple weeks of march are going to be fun to watch (unless you’re short).
likewise the last couple weeks of each subsequent delivery month. this is a LONG game.
we live in interesting times.
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