Is silver about to explode higher?
Silver appears to be catching a bid. It raises a question: if copper is at all-time highs, why not silver? As an illiquid trade, silver often leads gold higher as well.
Bullet points:
· Global silver supply is tightening, because 56% of mine supply comes from copper and nickel ores the processing of which requires sulphuric acid which is not easily sourced due to the Hormuz closure and China withdrawing from exporting it.
· Copper and nickel prices are hitting record highs suggesting that silver should be as well.
· Industrial demand is increasing driven by a number of factors, adding perhaps 10% or more to The Silver Institute’s estimates of industrial demand, increasing the supply deficit. The industrial shortage is increasing significantly.
· China is severely restricting silver exports and has become a net buyer in record quantities.
· Speculative interest in London and New York paper markets is at the lowest level seen in over a decade, leading to poor liquidity and potentially another bear squeeze.
The current setup
There are a few indications that something is afoot in silver even though speculative interest in both gold and silver is almost absent. This tell us that selling is almost exhausted and the speculators’ next action will be to buy.
It’s not just silver. Gold’s open interest on Comex has also collapsed to levels not seen for nearly 20 years:
Open interest in both metals is now lower than at the bottom of the 2011—2015 bear market in gold. But today, they are trading in fundamentally different conditions, leading the wider commodity world to higher price levels.
