Silver Manipulation Will Destroy Itself

Watch the video if you want the full story, but this is a quick recap:

Low Prices = Stackers Buying More

In the past, there are examples of investment demand for silver increasing after a major price rise. However, oftentimes that is due to new stackers beginning to stack. In the last few days, as silver has into the mid-$15 range, many investors are "backing up the truck", and buying even more physical. The same is likely true for buyers in China, India, and Russia. This increase in physical demand only serves to further the supply/demand deficit, and further deplete above ground reserves. As above ground reserves run out, the ability to suppress silver severely diminished, and real price discovery will become possible.

Low Prices = Less Mining Production

Long term suppression of silver will damage mining production. This is because there will be less incentive to mine silver. Mines that are profitable at higher prices, such as $20/oz, will not be able to be profitable at current prices. There also will be less incentive to invest in exploring for new deposits, opening up new mines, and buying new equipment. I believe this is a big part of why silver mining production decreased in 2016, compared to 2016. Lower mining production will lead to greater physical supply deficits, further depleting above ground reserves.

You Matter!

The average stacker plays an important role in this whole supply and demand dynamic. Physical demand for coins and bars have accounted for around 20% of total physical demand. As physical investment demand increases, we get closer to the possibility of a physical shortage, and further depletion of above ground reserves. Though the investment demand for silver is often marginalized, it can and has played an important role in setting the price of silver. Year after year, millions of ounces are accumulated, and stashed away. Taking away this from the paper market will only hurt the efforts to suppress prices.

Video:

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