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James Anderson

James Anderson

SD Bullion

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion…

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Is Silver About To Break Out?

Silver

If one is considering taking a prudent position in physical investment-grade bullion. One must consider silver given its low historic value at the moment compared to gold bullion.

Silver both fundamentally and technically speaking, appears to have both a better potential upside and outperformance beta versus downside at today’s price levels. We expect sometime during the coming decade (the 2020s), silver will reward its bulls for their patience.

Know that silver especially throughout the full fiat currency era has mostly been a spike and dive precious metal. One must trade, buy, own, and sell some silver bullion with that in context for long term success. 

In another SafeHaven silver update coming soon, I will illustrate some ‘when to sell silver’ tools one can use to better potentially determine when it is best to potentially sell some silver positions.

Recent performance, the spot silver price in fiat US dollars had a November 2019 loss. 

The silver price appears to be backfilling and consolidating the gains from its strong summer run starting from the mid $14 to $19 oz recent high in early September 2019 just before the NY Federal Reserve REPO loan program began.

Here is how silver has done for the year 2019 now almost complete.

Silver Price 2019


(Click to enlarge)

To understand what likely contributed and even possibly caused this recent near $5 oz increase in silver, one must consider physical flows in the derivative markets where silver’s spot price is ultimately derived day after day.

A physical addition of over 110 million ounces of silver bullion into silver ETF funds this summer 2019, is the size of either the Hunt Brothers and nearly the Berkshire Hathaway Warren Buffett silver positions. This record-sized silver ETF investment inflow took place in remarkably less time than either large silver bullion whales mentioned.

Summer Silver Bull Conversation 2019

The Goldman Sachs Commodity Index currently sits at a 100-year low level measured by arbitrarily cherry-picked Dow Jones Industrial Average stock values (General Electric takes no part in that measurement now being dropped a few years back for underperformance). 

Only two precious metals, palladium, and gold are currently consistently making new nominal price highs in various fiat currencies around the world. 

Platinum is also currently now near 100-year low valuation levels versus gold. 

The relatively high historic gold-silver ratio at the moment is making both medium and longer-term silver/gold bulls salivate.

Gold Silver Ratio Full Fiat Currency Era


(Click to enlarge)

As the NY Federal Reserve continues pumping trillions of short-term loans into the overnight bank loan markets via its 24 primary member investment banks and financial houses

One must reflect upon what happened the last time we saw this much-outsized growth in the M3 US Monetary Base.

US Monetary Supply Trend vs Growth: Out of Line Again


(Click to enlarge)

Ultimately unheard-of emergency responses (QE1 & QE2) followed the 2008 Global Financial Crisis. They combined helped spur a silver bull market that culminated in the spring of 2011 where we saw the silver spot price quintuple in a smattering of years leading up to its then peak of near $50 oz.  Related: Will Bezos Buy The Seattle Seahawks?

The silver price ran from a low of around $9 oz spot in late 2008, when the physical silver bullion market was essentially out of inventory selling at backorder selling silver bullion at exorbitant premiums (as high as 80% over the then spot price). All this while various deposit banks and financial institutions failed around the US and the world.

The potential for both current and further ‘surprise’ inflationary policy continues. The Federal Reserve openly trail balloons FT headlines stating it may “let inflation run above target.”

We like others continue to bet that silver prices will have a tremendous run to come.

The full fiat currency era price chart for silver is as follows.

Silver Price Full Fiat Currency Era


(Click to enlarge)

The long-term silver price is still well off its two nominal record silver price highs.

You should only consider riding the coming silver bull market if you can handle the volatility and position yourself appropriately to handle. See the silver rides in the 1970s and early 2000s for an idea as to how volatile it can get in silver market ups and downs.

Rampantly increased central bank gold bullion buying is just an increasing sign another silver bullion bull market is likely around the corner.

By James Anderson via SD Bullion

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