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The End Of This Correction Is Nigh: $100 Silver Ahead

Scorpio

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The End Of This Correction Is Nigh: $100 Silver Ahead
Peter Krauth


mercury.jpg
Being a silver investor over the last few weeks has become more psychologically challenging.

That’s true even for us die-hard silver enthusiasts.

After all silver had a standout 2020, having gained about 47% in its best year since 2010. That easily outpaced gold’s own impressive 25% return.

But the reality is that so far in 2021, silver is down 9%. And meanwhile, nearly all the fundamental market drivers have remained intact. It seems the pressures on silver prices are likely from two angles. The first is after such an impressive 2020, it was due to correct. That’s what bull markets do.

The second pressure point is a rising U.S. dollar index, likely thanks to rising long-term bond yields. However, it’s important to consider that this trend will also run its course and exhaust itself. That could happen naturally, or the Fed could intervene by imposing Yield Curve Control.

But higher yields are a sign of soaring inflation expectations and burgeoning economic activity. And a stronger U.S. dollar, which favors imports over exports, is probably not a favored outcome for central planners.

So patience is the best approach at this point. In my view, the end of this silver correction is nigh.

Embrace Silver Volatility

In a recent report, Bank of America’s commodity analysts indicated they expect to see silver prices averaging $29.28 this year. That’s based on their expectation for a modest supply deficit of 281 Moz. They also point out, “While we expect a rebound in supply this year, output should remain below the peak levels seen a short while back, also because the project pipeline is relatively empty.”

The push for green energy combined with massive infrastructure spending, and stalwart investment demand, should keep a bid under the silver price and help it rise again this year.

Although silver is down 9% in 2021, and has retreated 19% since its August peak near $30, that’s certainly well within historical bull market corrections.

The point is silver corrections come with the territory. Investors need to embrace them, and use them to their advantage.

Between 2002 and 2006, silver dropped 10% or more four separate times.

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Then, between 2006 and 2011, more short but sometimes deep corrections came, with silver dropping 13% or more three separate times.

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The point is to look at what silver did after those corrections. In nearly every case, it went on to establish new bull market highs.

Now let’s look at what silver has done in multiple currencies.

20 Years of Worldwide Silver Gains

As you can see from the following chart, over the past 21 years silver has produced an average annual return between 8% (Swiss franc) and 16.48% (Chinese yuan). In USD, silver averaged 11.43% per year.

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Of course, that came with considerable volatility as well as a number of down years. But the world average is 11.93% gains annually over the last two decades. So the overall trend is undeniably up: we’re in a silver bull market.

Now let’s zoom out for a longer-term perspective.

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If we account for inflation, and that’s massively understated “official inflation,” then silver prices peaked at $120 in 1980 and around $57 in 2011. Today’s price near $24 is still well below those levels, suggesting a lot of upside remains ahead.

In fact at $24 today versus the inflation-adjusted $120 in 1980, silver is currently about 80% below that peak. And yet, current economic fundamentals like debt, deficits, spending, interest rates and supply/demand outlook are so much more bullish that the 1980 $120 level is likely to be easily surpassed.

Looking at silver from a technical perspective, in my view we are either at or near a final bottom for this correction.

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The $23 and $24 levels acted as support multiple times between late September and mid-December. I think any further weakness is likely to be limited near $23.

If you hold or you’ve been buying silver and/or silver stocks over the past several months, two approaches make the most sense to me right now. Either sit tight if you feel you have sufficient exposure to this sector, or gradually add to some of your positions if you feel they’ve simply gotten too cheap.

Investors should emphasize how to be properly positioned in this market, with balanced exposure to physical silver, silver producers and royalty/streamers, as well as silver developers and even high-octane junior silver explorers.

In the Silver Stock Investor newsletter, I provide my outlook on which silver stocks offer the best prospects as this bull market progresses. I recently added a junior explorer that’s up 40% in just eight weeks despite current weakness, with scores of others ripe for buying now.

It’s time to be a silver contrarian. History has rewarded us repeatedly.

$100 silver is well within reach.






Peter_Krauth_pic.jpg

Peter Krauth is a former portfolio adviser and a 20-year veteran of the resource market, with special expertise in energy, metals, and mining stocks. He's the resource specialist for Money Map Press and has contributed some of its most widely read and highly regarded investing articles to Money Morning. As editor of Real Asset Returns, he travels around the world to dig up the latest and greatest profit opportunity, whether it's in gold, silver, oil, coal, potash, chromium or even water. Krauth holds a Master of Business Administration from McGill University and is headquartered in resource-rich Canada.


 

gnome

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Looks like it's all in the dollar rally to me. Should act as a slingshot for silver when it reverses.

Looking at those long term charts makes me nostalgic for $5 silver.
 

gnome

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Buck

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awwww but they are

when they're dressed up really nicely, some o.k. condition airtites, and they're basically common date lower MS Washingtons, i'm already dispensing them for that price...i got 'em in roll form at junk prices some years ago when people were happy to get rid of 'em

now they can't get enough of 'em...40% halves for $5 a piece are now a target sell price because i'm getting that
 

EO 11110

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isnt silver production mostly a bi-product of copper mining? does this chart predict more supply of silver?

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Electric vehicles, higher prices to boost global copper output — report​

 

GOLDBRIX

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Yep, Over $5k in usds per every T.oz of Ag.
Au is over $36k per usd.
 

ZZZZZ

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isnt silver production mostly a bi-product of copper mining? does this chart predict more supply of silver?

View attachment 206654



Electric vehicles, higher prices to boost global copper output — report​


Silver mine supply is a mixed bag. In addition to copper, a lot of it is byproduct of lead and zinc mining. And gold too. Not much lead, zinc and gold used in EVs.

There are literally only 10 or 12 mines around the world where silver is the primary product being mined.
.
.
 

Mujahideen

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Wow. I’ve never heard this story before. :eyeroll:

I’m already positioned to take full advantage of it tho. If it hits $100 I can retire.
 

TAEZZAR

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I’m already positioned to take full advantage of it tho. If it hits $100 I can retire.
When it hits $100, gas will be$10/12 gal & ribeye steak will be $40/lb. and you think you can retire ?:don't    know2::shit happens::rotf::rotf:
 

Mujahideen

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When it hits $100, gas will be$10/12 gal & ribeye steak will be $40/lb. and you think you can retire ?:don't    know2::shit happens::rotf::rotf:

What will the price of $qqq be?

if silver goes up first, I’ll have a nice chunk of corporations working for me.
 
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Someone_else

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isnt silver production mostly a bi-product of copper mining? does this chart predict more supply of silver?

Silver mine supply is a mixed bag. In addition to copper, a lot of it is byproduct of lead and zinc mining. And gold too.
One might assume that a higher supply of silver as a secondary product would depress the price. For example, copper producer might have some silver to sell, and just wants to get it sold at whatever price they can get. A higher production of the primary metal would lead to more silver to sell, regardless of the current price. Conversely, a lower production of the primary metal would imply less silver as the secondary metal.

Here is another possibility. What if the producer had the (by-product) silver, and instead of selling into a manipulated market, they decide to withhold it until they can get a higher price. Since it is not their primary business, they might be able to be very flexible about waiting for a better price. What if a number of producers thought they could nudge a few more tens of percents out of their secondary silver if they all decided to embargo for a short while?

Heh, heh. I wrote "embargo". "Who rule Bartertown?!"
 

TAEZZAR

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ZZZZZ

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One might assume that a higher supply of silver as a secondary product would depress the price. For example, copper producer might have some silver to sell, and just wants to get it sold at whatever price they can get. A higher production of the primary metal would lead to more silver to sell, regardless of the current price. Conversely, a lower production of the primary metal would imply less silver as the secondary metal.

Here is another possibility. What if the producer had the (by-product) silver, and instead of selling into a manipulated market, they decide to withhold it until they can get a higher price. Since it is not their primary business, they might be able to be very flexible about waiting for a better price. What if a number of producers thought they could nudge a few more tens of percents out of their secondary silver if they all decided to embargo for a short while?

Heh, heh. I wrote "embargo". "Who rule Bartertown?!"

Many if not most miners with a steady supply of silver by-product have "streaming" deals with companies such as Wheaton Precious Metals, Metalla, EMX, etc.

The miners have a contract to sell the by-product silver at a very low price to these companies, who made an up-front payment for the right to buy the byproduct that the miners really don't want to bother with. It's generally a win-win solution.
.
.
 
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pay dirt

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Silver currently priced in
Venezuelan Bolívares is

1 VEF = 0.00000000000504198 USD
4,958,367,766,443 per troy ounce.

Fiat to Infinity ∞ ∞ ∞.
 

hoarder

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When silver sells for $100, the spot price will probably still be $29.
 

gnome

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isnt silver production mostly a bi-product of copper mining? does this chart predict more supply of silver?

View attachment 206654



Electric vehicles, higher prices to boost global copper output — report​


Tesla appears to be on pace for 100% YOY vehicle production. The industry as a whole maybe 50% growth.
Add in all the EV chargers and solar growth, mines will not keep up.
The largest PV producer in the world, JinkoSolar is tripling capacity. Tell me who are the silicon suppliers?
 

GOLDBRIX

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Here is another possibility. What if the producer had the (by-product) silver, and instead of selling into a manipulated market, they decide to withhold it until they can get a higher price.
The issue with that is with-holding the by-product from market ramps up the costs of producing your base metals, Zinc, Copper, Lead,... becoming more expensive to produce.
Even the few mines that can claim they are majority silver have large numbers in Zinc, Lead, Copper, and some Gold by-product that reduces their costs in producing their silver.
There are gold miners who will hold back inventory when prices are low. Only selling enough gold and the by-products to keep the lights ON, the employees paid, and taxes.
 

gliddenralston

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When it hits $100, gas will be$10/12 gal & ribeye steak will be $40/lb. and you think you can retire ?:don't    know2::shit happens::rotf::rotf:
I don't understand why stocks, housing, bitcoin and other things can go to the moon in price without causing $12 gas or $40 steak, but if silver goes up its the end of the world.
 

the_shootist

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If I had a shiny mercury dime for every one of these 'silver to the Moon is imminent' claims I wouldn't need to buy any silver
 
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the_shootist

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I don't understand why stocks, housing, bitcoin and other things can go to the moon in price without causing $12 gas or $40 steak, but if silver goes up its the end of the world.
Because there's no logic behind it
 

EO 11110

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789

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How old is this Peter Krauth ? perhaps, in his life-time

What was the price of silver in 1921 ?
 

Lancers32

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You thought you were bullish?


 

solarion

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<SLV>

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$250 top coming.
 

GOLDBRIX

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I don't understand why stocks, housing, bitcoin and other things can go to the moon in price without causing $12 gas or $40 steak, but if silver goes up its the end of the world.
Because Silver and Gold have real value that is been depressed now for a long time. Watch out when all folks get woke to the shenanigans of the TBTF banksters.
 

BackwardsEngineeer

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Recently moved the pond where the boating accident occurred....

Not sure what fictitious number might be placed next to it, but I know and absolutely contend that Ag stuff is heavier than a boat anchor... If its value was in direct proportion to its (back misery times additional age) raised to the power of my terrible out of shapeness, it has be $743 oz