Silver Monitoring Thread £ (GBP) only.

[HonestMoneyGoldSilver]

@timsk - Thanks for that, asking the simple questions! OK this will be a lengthy post but here we go:

There are many roles in finance/banking and trading is not the primary mode of employment. A rough breakdown for the UK (ONS stats) is:

1. Business and financial project management professionals: 229,000
2. Financial managers and directors: 222,000
3. Financial clerks: 137,000
4. Financial and investment analysts: 110,000
5. Other financial associate professionals: 119,000
6. Financial accounts managers: 93,000
7. Actuaries, economists and statisticians: 44,000
8. Financial institution managers and directors: 60,000
9. Financial advisers and brokers: 51,000
10. Financial and insurance sales representatives: 28,000

I would be in the first group acting as a consultant for various businesses although I could work in groups 4 or 5, which include the trading activity you mention. Group 7 would also be a fit for me

As for what makes gold and silver move, there are numerous factors including:

1. Global economic and political factors: The price of gold and silver are affected by inflation, recessions, political instability and changes in government policies. e.g. If VAT was dropped on silver in the UK that would spike demand, as happened with gold when VAT was dropped. Inflationary pressures and recessions in the UK (or China, USA, EU) may influence price in complex and time-lagged ways. Revolts against the Dutch government, Italian government, French government, UK government (PM changes), Canadian government, US government (all of which are happening as we speak), may cause investors to seek safe havens, as may negative headlines about banking and financial systems. There is currently a fascinating movement in the USA with 14 states, including Texas, attempting to make gold and silver legal tender once more - i.e. accepted for all government taxes, debts and commercial payments - as is written in the US Constitution. Note the peak for PMs historically tend to occur towards the tail end of crises rather than at the beginning. 
2. Geopolitical events: Major geopolitical events such as wars, terrorist attacks or natural disasters can lead to an increase in demand for PMs as a safe haven asset. Again we are witnessing an uptick in such events relative to the recent past. IMHO the insurance sector is over-exposed to natural disasters in the UK, EU and USA to floods, droughts and in the case of the US in particular, hurricanes, earthquakes and train derailments (Ohio). Insurance, retail banking, commercial and investment banking are much more amalgamated today than they should be and indeed than they used to be (Repeal of Glass-Steagall, 1999, aka "The Citigroup Act")
3. Central banks: The actions of central banks buying or selling gold reserves. Russia, China, Iran and perhaps even western central banks are stealthily amassing huge positions. Some commercial entities in physical gold and silver are sounding alarm bells about exchanges being "drained" by the east. This is in contrast to the actions of other governments, including the UK and Canada, who sold large quantities of gold under Gordon Brown and Jean Chretien circa 1999-2002
4. Industrial demand: Silver (and gold) have many industrial uses, e.g. electronics and solar panels or the JWST (James Webb Space Telescope). Changes in demand for these industries impact the prices of silver (and gold). We are currently on an upward trajectory in various industrial uses. People tend to only think of their own country or major economies and neglect developing or 3rd-world countries, but the demand from developing countries with large populations like India, Pakistan, Brazil and Nigeria, are important factors not just for precious metals but for environmental issues too. These countries in particular will produce the majority of global population increases in the coming decades, particularly African nations like Nigeria (China has peaked and is now in decline)
5. The classic supply and demand: If demand for gold and silver increases but the supply remains constant or decreases, the price will most likely increase. A great example of this is American Silver Eagles. The US Mint was effectively ordered by Congress to ramp up production to meet domestic demand (their legal obligation) yet the US Mint did not deliver. In 2021 there were approx 28 million Silver Eagles minted, the US Mint promised to increase production, yet in 2022 there were only approx 16 million Silver Eagles. That led to a huge spike in the premium for Eagles (it exceeded 100% at times) and these factors are still in play in 2023 with the US Mint failing to meet its obligations in both mintage numbers and quality assurance. There is no extra intrinsic value in a Silver Eagle vs a Britannia or Maple Leaf, indeed, many would argue the Britannia is more aesthetically pleasing and of higher general quality, with Maple Leafs (post-2018) arguably considered the best silver coin available. | U.S. Mint (usmint.gov) for production figures. These factors apply to every mint individually and cumulatively, as well as to primary PM sources (mining operations)
6. Currency fluctuations: The price of gold and silver is often inversely correlated with the strength of the US dollar. When the value of the dollar decreases, the price of gold and silver tends to rise, and vice versa, as you alluded to
7. Jewelry and numismatic demand: Changes in demand for jewelry and numismatics can impact the price of gold in particular as well as silver. The question of what factors influence demand for jewelry/numismatics is a more interesting question with many complex social and economic factors. In the most general sense, the nouveaux riche tend to "invest" heavily in jewelry and bling items whereas the old money tends to stack bullion. Those in the middle classes find numismatics more attractive than slightly less well-off individuals, who tend to prefer generics or coins. Sadly our world is tending towards the eradication of the middle classes. The nouveaux riche crypto kings/clowns tend to go for egregious displays of wealth. There's also evidence of racial and religious tendencies towards one class of asset over another. In a stark example of this in the USA, households from minority ethnicities in less-affluent neighbourhoods tend to have MORE expensive cars and bling items than those in middle class white neighbourhoods. The Jewish who follow the Talmud religiously, excuse the pun, always allocate 5-15% of their total wealth to gold and silver. An increase in the number of traditional Jews or the wealth of Jews will naturally lead to an increase in demand for precious metals. Other cultures, especially the Chinese, place high value on gold and will buy gold for all occasions from wedding gifts to CNY, the birth of a child and new houses. Basically any major social occasion in China = buy gold
8. Interest rates: When interest rates are low, the opportunity cost of holding gold and silver decreases, which can lead to an increase in demand and prices. The market recently had priced in a 50 basis points Fed Funds Rate hike, which partially explains the dip in PM prices a month or two ago, but when it became clear the Fed was going to raise 25 basis points, this was always going to increase the price of PMs, as the market had previously factored in 50 basis points. WHEN the Fed and BoE/ECB pivot back towards quantitative easing, the price of precious metals WILL explode. This relationship is strong and well understood, as you alluded to. I have been predicting the CBs won't pivot until 2025 but I may have been wrong about that and the major movements may happen in 2024 or in a SHTF situation, perhaps even at the end of 2023. You definitely want to be holding before the CBs pivot and not afterwards, as prices may never come back to the buy points you have targeted. Some people will just buy on allocation every month regardless of price and there is a decent argument for doing that. I'm a contrarian investor and only buy when prices dip, never when they rise. That's a slightly riskier strategy as prices may never hit your buying targets. Note it's technically impossible to time the market perfectly and anyone who claims they can do this is either manipulating the markets or lying
9. Market speculation and sentiment: If investors believe that the price of gold and silver is going to increase, they may buy more, which can drive up prices. FOMO and FUD, essentially. We are currently at the beginning of a FOMO period with some quite major producers and sellers of PMs talking about "Silver Mania" and "PM Mania". It's becoming a global trend for ordinary retail investors to start stacking
10. Technological advances: New mining techniques or technologies that increase the efficiency of production can impact the supply and demand balance and affect prices. I'm a silver bull at the moment, I still love gold but let's be honest, it's bloody expensive @ $2000/oz (£1635/oz). I don't enjoy fractional due to the premiums so I'm buying silver, which works for me as previously I was solely stacking gold. SILVER. I discussed in my "welcome noobs" post the AISC (All-in Sustainability Costs) for silver. The AISC in Q3 2022 was $16.56/oz averaged over several major companies. Not all figures are available and I will be diving into SEC filings and company reports at some stage to really nail these figures down (it's complex, different companies and countries have different accounting methods and reporting standards for AISC). Anyway, silver prices have been suppressed, some claim by the COMEX-LBMA cartel, for decades. That has led to chronic under-investment in new mines and new technologies particularly with regards silver. There are always incremental improvements and efficiencies via machine-learning, AI, etc, in all major industries, however, there are no major new technologies that I am aware of that apply specifically to silver as the investment in these technologies and new mines simply hasn't been forthcoming for 20 years. This leads me to believe the current average AISC for the major silver mines is $18 and that this floor is currently rising. (Silver and gold usually occur together in the same deposits although it's possible to find them individually. Arguably silver is a "by-product" of many mining operations focussed on gold and base metals such as copper, zinc, lead, etc, and sometimes vice-versa, base metals are a by-product of PM mining). Here is a brief summary of the AISC figures and YoY changes I'm talking about:

 

1. Pan American Silver Corp (PAAS, Canada, Latin America) - $17.97/oz (+ 10% YoY)
2. SSR Mining Corp (SSRM, Turkey) - $15.91/oz (+29% YoY)
3. Hecla Mining Company (HL, United States) - $14.20/oz (+11% YoY)
4. Fortuna Silver Mines Inc (FVI, Canada, Latin America, Burkina Faso) - $14.46/oz (-8.8% YoY)
5. Endeavour Silver Corp (EXK, Mexico) - $20.27/oz (+16% YoY)

Average AISC for those companies (Q3 2022) is $16.56. It seems obvious that as AISC goes up (which is the way it's definitely trending with inflation, energy, labour, finance, ESG, etc) or down, that this would correlate strongly with the spot price of these metals, although this relationship is perhaps not as robust as one might expect. Regardless, if the spot price goes below the AISC, the mines will reduce or stop production as you can't run a business indefinitely that is unsustainable/unprofitable. It is my hypothesis that the absolute bottom of the market for silver was/is $18/oz and that it's unlikely to remain below $20/oz never mind $18. I put my money where my mouth is and bought big @ $20/spot and continued to buy when it dipped again below $21. I figure I'm only risking 10% and my money is losing 10% in the bank anyway, so, this was in many respects a free roll on silver

*Note this is not financial advice just an opinion piece and I'm not sure about how I feel buying at $25/£20.50 or above, however, after considering the above 10 factors, I believe silver is headed to $30/oz by year-end, as do many analysts who have an intrinsic bias against precious metals. If we are taking an historical gold/silver ratio of 16-30, and assuming that gold isn't overpriced and will continue to rise (some are saying the BRICS will set a price of $3000/oz), then silver could have significant potential to yield asymmetric returns. As always don't spend more than you can afford to lose. IMHO you should not invest in silver or PMs purely as a speculative move but rather as insurance, to be your own bank and to enjoy the precious metals in your physical possession - just please don't finger them like the majority of stackers on YouTube, a pair of thin cotton gloves is better for your stack. 

**No I am not unduly concerned about contagion from SVB, Silvergate, Signature, Credit Suisse (or Deutsche Bank). IMHO, each of those banks have specific reasons why they failed and this is markedly different from the contagion that systematically led to collapse in 2008. I would further posit that it was the crypto kings/clowns that were responsible for the banking failures in the USA and it's highly illogical that cryptos boomed on news of the collapse of the biggest, most tech-friendly, crypto-related bank in the western world. That's not to say I don't have concerns about the banking system in general but my contrarian view is that the GSIBs are not at risk in 2023 like they were in 2007-8. It is my opinion that the internet is overloaded with fear-mongering clickbait. But yes, as I alluded to previously, I have largely transitioned my cash-assets from bonds and currency to HONEST MONEY, gold and silver - God's money

[timsk]

10 hours ago, HonestMoneyGoldSilver said:

@timsk - Thanks for that, asking the simple questions! OK this will be a lengthy post but here we go . . .

Hi HMGS,

Wow! I wasn't expecting that! 🙂

Thank you for going to so much trouble to write such a comprehensive reply. I really appreciate it and I hope other subscribers to the thread will too and hit the like button.

For me and my personal circumstances, the most thought provoking point is #8 about interest rates:

". . . When interest rates are low, the opportunity cost of holding gold and silver decreases, which can lead to an increase in demand and prices. The market recently had priced in a 50 basis points Fed Funds Rate hike, which partially explains the dip in PM prices a month or two ago, but when it became clear the Fed was going to raise 25 basis points, this was always going to increase the price of PMs, as the market had previously factored in 50 basis points. WHEN the Fed and BoE/ECB pivot back towards quantitative easing, the price of precious metals WILL explode. This relationship is strong and well understood, as you alluded to. I have been predicting the CBs won't pivot until 2025 but I may have been wrong about that and the major movements may happen in 2024 or in a SHTF situation, perhaps even at the end of 2023. You definitely want to be holding before the CBs pivot and not afterwards, as prices may never come back to the buy points you have targeted. Some people will just buy on allocation every month regardless of price and there is a decent argument for doing that. I'm a contrarian investor and only buy when prices dip, never when they rise. That's a slightly riskier strategy as prices may never hit your buying targets. . ."

I've noted your use of capitalisation. I fear QE will happen much sooner than you suggest due to the brewing banking crisis, especially Deutche Bank which, if it were to falter, would not only be a crisis for Germany (already suffering in large part due to the destruction of the Nord Stream pipeline), but for the entire EU. Deutche's been in trouble before and the assurances from Olaf Scholz, Christine Lagarde et al that all is well don't appear to impress the markets! Obviously, it's too big to fail and the German government will step in and do anything and everything to bail it out - but at what cost to the wider economy?

 

[flyingveepixie]

31 minutes ago, timsk said:

Wow! I wasn't expecting that! 🙂

Thank you for going to so much trouble to write such a comprehensive reply. I really appreciate it and I hope other subscribers to the thread will too and hit the like button.

Agreed. Superb post.

[ChrisSilver]

Posts in this topic will temporarily require moderator approval whilst we go through and move off topic posts to a new topic or hide posts.

Please do use the relevant sections and relevant topics when making posts on the forum to keep it tidy for others, it is a group effort  

EDIT: AI and chatGPT posts moved to a new topic in the non PM section. Please let me know if I have missed any by hitting on the 3 dots and report. then I can move those over also. 

Temporary moderation on this topic has now been lifted, please do try to keep this topic on rack and start new topics in the relevant forum sections if needed. Thanks for keeping the forum tidy 🙏

Edited March 30, 2023 by ChrisSilver

[silversky]

I'm genuinely rather surprised that Silver has managed to push on up to where it currently is.  I expected far more of a base building effort than this sharp rebound.  Another positive weekly candle is forming today, and I feel that close tomorrow will give us a strong indication as to whether this recovery has legs or not.  In both currencies it is approaching strong resistance, but who knows, it may just punch on through and form some sort of consolidation above.  Interesting move.

[SlugForAButt]

1 hour ago, silversky said:

I'm genuinely rather surprised that Silver has managed to push on up to where it currently is.  I expected far more of a base building effort than this sharp rebound.  Another positive weekly candle is forming today, and I feel that close tomorrow will give us a strong indication as to whether this recovery has legs or not.  In both currencies it is approaching strong resistance, but who knows, it may just punch on through and form some sort of consolidation above.  Interesting move.

Yup. Silver is right on it's resistance point now, the next few days will tell.

Gold hit resistance a few days ago and then dropped.

I've got as funny feeling we'll stay in this channel until certain people are good and ready to let rip.

[CazLikesCoins]

8 minutes ago, SlugForAButt said:

I've got as funny feeling we'll stay in this channel until certain people are good and ready to let rip.

That sounds like a job for @HerefordBullyun

[silversky]

54 minutes ago, SlugForAButt said:

Yup. Silver is right on it's resistance point now, the next few days will tell.

Gold hit resistance a few days ago and then dropped.

I've got as funny feeling we'll stay in this channel until certain people are good and ready to let rip.

Yes.  Gold broke out above the three (in fact four) previous highs in GBP, and is now consolidating above as shown on the weekly chart below.  Perhaps Silver will manage to do the same above the last three highs?  Hard to know if it will be turned down if and when it reaches the previous highs, or whether it might just punch straight through like gold did.  Obviously, it's performed far poorer than gold for a while now, so it has a lot further to go to play catch up.

[Stacktastic]

4 hours ago, silversky said:

I'm genuinely rather surprised that Silver has managed to push on up to where it currently is.  I expected far more of a base building effort than this sharp rebound.  Another positive weekly candle is forming today, and I feel that close tomorrow will give us a strong indication as to whether this recovery has legs or not.  In both currencies it is approaching strong resistance, but who knows, it may just punch on through and form some sort of consolidation above.  Interesting move.

I can see gold dumping hard potentially if this banking thing seems to be OK. We know its not but the public & general speculators dont - could take time to come back also. 
Silver should follow but with it being so tightly controlled the price could easily break out so its unknown - the cats out the bag with the banks now as well as the CBDC's etc. 
The main thing for me is the miners has hardly budged much - usually they lead on an actual break out. 

The next month will be telling as we are in the next quarter & the markets have been so low on volume this week. 

Edited March 30, 2023 by Stacktastic

[Zeuk]

30 minutes ago, Stacktastic said:

I can see gold dumping hard potentially if this banking thing seems to be OK. We know its not but the public & general speculators dont - could take time to come back also. 
Silver should follow but with it being so tightly controlled the price could easily break out so its unknown - the cats out the bag with the banks now as well as the CBDC's etc. 
The main thing for me is the miners has hardly budged much - usually they lead on an actual break out. 

The next month will be telling as we are in the next quarter & the markets have been so low on volume this week. 

Imho I think for gold to go down significantly you need to see a turn in inflation and demand.  Even lower inflation of say 5% will still mean slow gains for gold and the global trend still seems to be the big buyers are de-risking the dollar as a global currency.

for gold to pull back to real historic prices I think we would need deflation and that seems a way off if not borderline impossible.

Peaks and troughs as always but if you had a billion dollars you needed to invest in a low risk holding the options remain limited. 

[SidS]

They'll never allow deflation.

[PipSqueak]

If the spot went to £80 an Oz would you sell for FIAT cash, digital dosh, trade for goods or hold?

[katyc]

Sell for Dirty Fiat and use it to pay off some Buy to Let properties (an income generating asset) 😊

[James32]

17 minutes ago, PipSqueak said:

If the spot went to £80 an Oz would you sell for FIAT cash, digital dosh, trade for goods or hold?

Trade for another safe entity, property/land etc

[katyc]

I'm also considering investing outside UK. My better half is Polish and there's much less nonsense with property laws there, hence the temptation.

[Bigmarc]

34 minutes ago, PipSqueak said:

If the spot went to £80 an Oz would you sell for FIAT cash, digital dosh, trade for goods or hold?

I wouldn't have much left by the time it hit £80. I will sell 50% each time in stages on the way up. Will sell for fiat and will use some to fund my next eBay/Etsy venture, some in digital (depending on the price at the time) and the rest on a brand new set of Joe Essex teeth. 

[katyc]

20 minutes ago, Bigmarc said:

I wouldn't have much left by the time it hit £80. I will sell 50% each time in stages on the way up. Will sell for fiat and will use some to fund my next eBay/Etsy venture, some in digital (depending on the price at the time) and the rest on a brand new set of Joe Essex teeth. 

That's a good point actually. If it went up - let's say 50% for example - then most of us will sell a good chunk, hold the rest, sell some more (if it goes up further) and so on because it's impossible to time the highs perfectly. Although we can usually gauge a good idea when the economy will pick up again if we study markets and economics enough (meaning knowing when the last opportunity to sell high is), so we can ensure some element of good timing.

But with the Black Swan events that keep happening in the world nowadays, maybe it's not so easy anymore.... (fancy catching a cold from a bat from a lab in China that was funded by Americans anyone?)

[PipSqueak]

57 minutes ago, James32 said:

Trade for another safe entity, property/land etc

It'd have to hit a lot higher for me to buy property with what I have. I would like a larger garage though so I could fit more V-twins.

[Bigmarc]

50 minutes ago, katyc said:

(meaning knowing when the last opportunity to sell high is), so we can ensure some element of good timing

Nobody goes broke taking profit but for me it's probably when the BBC put it in their headlines. 

[Bigmarc]

1 hour ago, katyc said:

Although we can usually gauge a good idea when the economy will pick up again if we study markets and economics enough (meaning knowing when the last opportunity to sell high is), so we can ensure some element of good timing.

Or when the government banks get close to their inflation target. The one thing I can't get my head around is that USA will probably reach it before the UK. So maybe keeping it in dollars may be a good idea. 

[flyingveepixie]

3 hours ago, katyc said:

I'm also considering investing outside UK. My better half is Polish and there's much less nonsense with property laws there, hence the temptation.

Saner country too by all accounts... I like the Poles.

Edited March 31, 2023 by flyingveepixie

[silversky]

Another very strong weekly close.  But will it continue?  I have a feeling that it will top out close to a full retrace of the previous collapse from the 20's, before working back down again.  If it punches through though, it'll likely spend a bit of time consolidating above before setting off on a spectacular rise.  But on balance, I think that's less likely.  I think a decline back to the 17's is more likely over the coming weeks followed by a real move upwards in the early summer.  Either way, it looks like a big move upwards is coming in the next few months.

[CANV]

if silver goes to 40 quid there will be buyers everywhere..  looking for 400.   

[Stacktastic]

21 hours ago, silversky said:

Another very strong weekly close.  But will it continue? 

No I don't think so as per you. A lot of people have probably got on board with FUD. 
Im in a very big physical group of people and they are all interested in metals now - they were not before.  
I think we could potentially see a really great dump short term
Not to mention the leverage manipulation to control the gold markets. 
not sure it will go to older lows though - I'm hoping for £15.30. £16.40's make sense for now. 

This is controlled though & I think that they want to bring down the banking system. 
that way people will cheer the CBDC's & I am not sure but crazyness could come through. 
There is talk of a forgivness of debt & that makes sense in some sense? 
But if people dump all equities there might be a window of time where metals reach bargain prices.  

Then metals will possibly pump hard - the signs are there. 
Cashing in on the dumps are key IMO - all the way up. 
Junior miners are the most undervalued assets.
Might be wrong but dont think so.  

Edited April 1, 2023 by Stacktastic

[silversky]

2 hours ago, Stacktastic said:

No I don't think so as per you. A lot of people have probably got on board with FUD. 
Im in a very big physical group of people and they are all interested in metals now - they were not before.  
I think we could potentially see a really great dump short term
Not to mention the leverage manipulation to control the gold markets. 
not sure it will go to older lows though - I'm hoping for £15.30. £16.40's make sense for now. 

This is controlled though & I think that they want to bring down the banking system. 
that way people will cheer the CBDC's & I am not sure but crazyness could come through. 
There is talk of a forgivness of debt & that makes sense in some sense? 
But if people dump all equities there might be a window of time where metals reach bargain prices.  

Then metals will possibly pump hard - the signs are there. 
Cashing in on the dumps are key IMO - all the way up. 
Junior miners are the most undervalued assets.
Might be wrong but dont think so.  

I think we're in agreement here.  I'm expecting a low back in the mid 17's again.  If it dips to the 16's then its a screaming buy.  Inflation is a backstop against losing money at that level, so if I had spare to pump in at that price I would be.  I might be a seller a bit higher up though, I think they'll cap all this trouble and tamp things down again for another year or so.  It looks like an abc ongoing in elliot wave theory, with a flat a and c wave likely at 17 handle.  But I could be horribly wrong of course.  I just think that anything in the 16's will be very short lived no matter what happens.