Who is going to win - supply or demand side economics

[BullionBuyer]

Hi Members

I have recently read that silver mines are slowly beginning to shut down due to the Covid 19 virus (especially in Mexico and Peru). This clearly will have an impact on the supply side. Furthermore, if demand starts to tank then demand for base metals may fall. Given that silver is a by-product of base metal mining there would be a further reduction on the supply side. Falling supply should, if all things being equal, mean that silver prices should rise.

On the flip side, a recession and  falling demand for silver as an industrial metal will reduce the demand for silver and put downward pressure on silver prices.

Which of these forces, supply side or demand side is likely to win out in the short to medium term - any thoughts???

[VikingJester11B]

Personally I believe prices will stay around the same and premiums will come back down.  This virus will not last forever and things will open sooner rather than later.  People will only accept isolation for so long and will demand action over the massive economic hits being taken.  Mints will reopen and ramp up production due to demand from dealers to restock their supply.  There will be a large influx in new bullion from both private and government mints, but once this panic buying stops the demand will go back down.  Due to the impending recession and people losing their jobs (10 million unemployment filings in 2 weeks for the US, insane) there will be less disposable income to be spent on metals as it will be a secondary priority to food and rent, and people (especially non stackers like the people panic buying right now) will start selling off precious metals to pay for these necessities.  Dealers will suddenly be stuck with a large supply of goods and won't be able to move it because the people left (us) won't pay the crazy high premiums that we are seeing right now.  Spot price may go up due to lower production, but premiums are going to have to go down just for dealers to move product again.  I think we'll be stuck in the middle and see prices similar to what we're seeing now.  Maybe even less with the normalized premiums.

Or I could be dead wrong and silver is going to shoot the moon to $50/oz and Gold to $2500/oz and you won't be able to find it anywhere. 

Nobody knows what tomorrow is going to bring. I think It's better to stack the best deals you can find in the moment and realize that 20 years down the road it likely won't matter if you paid $17/oz or $21/oz for Eagles, you'll just be happy to have what you have. 

[HawkHybrid]

david morgan says the silver market is demand driven.

so far who is winning?

 

HH