Short DD, feel free to comment.
Tailwinds:
- Commodity vs gold ratio has started to crunch down signaling commodity boom (copper, lumber, tin, oil, NG, even uranium). Silver, though considered a partial monetary metal, is only going to see increased demand from batteries, solar, EV, medical equipment from here on out. I believe one Tesla Roadster uses something like 1-3 kg of silver. Historical average gold to silver ratio is 40. We are at 66 ish. Mining ratio is 8:1, even lower.
- Natural elasticity built up from COMEX futures suppression. This is a long topic in itself, but the silver price along with gold price has been "managed" for years, with banks like JPM being fined millions of dollars for spoofing (creating massive sells using paper futures triggering cascade of sell stops during thin volume trading hours). However as supply becomes tighter the COMEX is increasingly being used as a method for private family offices, mints, industrials, and hedgefunds to take delivery. The situation is quite dire IMO after the recent "silversqueeze" movement- Currently there are about 700 million ounces worth of open contract, with 4 days until March delivery. This number is historically high, and even a small percentage of these contracts standing for delivery (i.e by mints and ETF etc who are feeling the demand) would lead to price volatility.
- Monetary metal. Due to its extreme utility it can be considered the Etherium or theta to gold, but it is nevertheless still store of value, even though it is not a tier I asset for central banks yet. While gold experiences short term head wind due to rising bond yields, a FED yield curve control policy would dramatically increase tail winds for gold. If history serves, gold and silver have a deep connection and a true commodities bull market is often marked by high gold prices.
- Unlike gold, silver has no direct competitor, perceived or actual. Graphene technology is many years away as is space mining.
Headwinds:
- Disbelief. Really this is the only head wind I see. Silver has all the properties of gold, and all the utility of something like copper, along with the right price for a value play. If you believe in commodities and inflation, silver to me is a no brainer. That does not mean people won't state its track record as a negative, I realize this. However I rather be in something that has been stagnant for 20 years with all the right fundamentals than something that has been hot for only one month with no fundamentals.
Volcanoes and earthquakes happen, and the longer you go without one the higher the odds of it happening.
Short term outlook:
- As mentioned the COMEX March contract situation is a developing story. Shorts closing out positions in fear of being asked to deliver will drive up prices. If this happens we can expect 30 dollars in short order.
- Technical wise, this is bullish with any method you chose to use. It is far above its 200 day MA, unlike gold. It has been making higher lows since December and hasn't neared its Sept low yet. Alot of upwards pressure esp recently, mixed with the aforementioned price smashes.
The plays:
-There are no physical silver available any where in the world to retail at spot price. That being said physical silver is something I would consider investing in as an adjunct to gold or bitcoin for store of value.
-PSLV. Sprott physical silver trust. Really as far as ETF's go I'd say this is the safest. Recent changes to SLV prospectus makes one weary about actual physical availability. PSLV trades at a slight premium to spot, however if one was to accumulate 10K ounces worth (~34K USD at current price) delivery is an option.
-Miners. More leverage, more volatility, potential jurisdiction risk. PAAS and AG are larger players. I am deep into many miners. Can discuss if you want.
-SLV calls. Again this is for position/swing trading. If you want to invest in SLV as a store of value, I personally wouldn't.
Not investment advice. Happy to discuss.
Disclosure: I invest in many silver (and uranium) stocks, and am founder of pmstonks subreddit.
Submitted February 19, 2021 at 12:02AM by tiefighter1992 https://ift.tt/2ZrGnWV
