2344.58
34.97
29.75
0.66
975.59
15.25
928.5
12.15

Silver Squeeze: A Coming Silver Rally?

Posted on December 01, 2022

Dull months in the gold and silver market, or some of the most exciting ones in recent memory? Here's a few points to keep in mind...

  • The Basel III agreement is causing massive paper gold liquidations and squeezes
  • The view is that this is the start of a large re-evaluation of gold's price and a baring of the paper market
  • Despite this, we've barely heard anything on physical gold being depleted
  • We are, however, hearing a lot about silver bullion being depleted
  • And, as we all know, where gold goes, silver follows

Let's go over why things are looking good for whoever can get their hands on silver right now.

Basel III what?

Without going into too much details regarding the why, the Basel III agreement is meant to enforce better physical backing for paper gold derivatives. In other words, less and less paper market manipulation.

We need look no further than the Bank of International Settlement recently claiming hundreds of tons of its paper gold to see a trend: paper gold owners want their bullion now. Yet as you delve deep into the Basel III's stipulations, you will see that it doesn't apply to the silver market nearly as much.

Logically, we should be opening with gold being depleted, and then silver follows suit. It's gold that's being pressured by Basel III, not silver. But what do things look like, instead?

Where is the silver?

This year has been a tale of silver shortages. The U.S. Mint initially tried to downplay its struggle to meet demand, but now admits suppliers are struggling to provide enough material. It drew the attention of Congress.

It should be fairly obvious why this is happening. Supply and demand are a thing in the physical market, if not the paper one. Because of its affordability, certainly around current prices, investors are buying silver left and right. After all, you can get almost a hundred ounces of silver for an ounce of gold.

Gold has its own mines, while silver is mined as a byproduct. Together with the U.S. Mint's dubious supply chain... Well, it's easy to get the picture. It's interesting that silver is being mentioned alongside copper in an upcoming supply squeeze. The thing is, while silver has plenty of industrial uses, not a lot of people are buying copper coins and bars. So that squeeze is going to look a lot different than that of copper or any other commodity, aside perhaps from gold and other precious metals.

And, as we all know, silver usually outperforms in a gold bull market. If there is indeed a gold bull market coming that will be based on a lack of physical gold, what can we expect from silver which is already running short?

Despite the U.S. Mint's woes, it's U.S. silver investors that are spoiled for choice. We'd urge some of our readers to compare our inventory to that of any retailer from, say, Europe, the world's gold refining hub. It's going to look a bit strange.

Either way, we're happy to offer our abundant silver products for as long as we can. If our supply ends up getting squeezed, well... we can always refer visitors to all of these foreboding articles we made.  We warned you!