• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: How Much More Demand Can Silver Handle?

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Wed, 02/16/2011 - 19:24 | 968330 trav7777
trav7777's picture

Silver, bitchez

Wed, 02/16/2011 - 19:32 | 968363 nope-1004
nope-1004's picture

This is an analysis based on market cap and excludes the very pervasive Blythe money laundering machine.

When it becomes common knowledge that the ETF's don't have the metal to back up all that paper issued, the shit will really hit the fan.  I don't even look at price in fiat anymore, because the OI in the metals markets are downright scary.  The greedy hedgies are all going to stand for higher and higher premiums to delivery in delivery months, which will push the whole thing overboard.

At that point, you better own some physical.


Wed, 02/16/2011 - 19:38 | 968386 sellstop
sellstop's picture

As soon as it becomes evident that the ETF's don't have the physical, all those paper shares will be sold with the click of a mouse and the physical will drop like a rock.


You better hope they have the physical.


Wed, 02/16/2011 - 19:42 | 968399 scattergun
scattergun's picture

A very interesting way to look at the situation.

Wed, 02/16/2011 - 20:57 | 968633 tmosley
tmosley's picture

Only if by "interesting" you mean "stupid".

It's like claiming that a default by an ETN would drive the price of the commodity it tracks to zero.  That is just stupid.  The price of GLD does not directly interface with the price of gold, except that they supposedly buy gold from the market.  The only effect selling GLD will have when the market learns they have no gold is that people will flood from GLD to miners and physical, or something else.  There is no method by which such an event could have a negative effect on the price of gold.  

Or did you think that China selling plastic rice drove down the price of rice on the world market?  It might have done so while they were fooling people, but not after they were found out.  Same principle here, just a lot more money involved.

Wed, 02/16/2011 - 22:53 | 968947 BigJim
BigJim's picture

I'm bullish silver, so, yes, I expect the price to go up. A lot.

But why do commentators think the price will rise in proportion to its previous peak in 1980 when the Hunt brothers were attempting to corner the market?

Wed, 02/16/2011 - 23:38 | 969062 Backspin
Backspin's picture

Good question.  I think a lot of people point to the previous peak simply as an example of what is possible, and then it's fun to inflation-adjust the numbers.  But I agree that things are totally different this time:  supplies down, demand up, and central banks inflating the fiat currencies.  It's a different ball game this time, it seems to me.

Thu, 02/17/2011 - 01:09 | 969278 Fred G Sanford
Fred G Sanford's picture

We have the Ben Bernanke dollar tsunami in progress.

Thu, 02/17/2011 - 02:08 | 969346 Backspin
Thu, 02/17/2011 - 04:00 | 969446 phil silver
phil silver's picture

I'm not a betting man. so Silver and Gold rising are a certainty.

There's no way I would bet on Fiat Paper maintaining its value. Hyperinflation is comin.

I admit that I like the thought of thrashing JP's organ, by buying Silver.


Wed, 02/16/2011 - 22:55 | 968951 william the bastard
william the bastard's picture

As soon as you use the word "price" in relation to gold you killed your argument (which is none other than the same tired spume you offer daily)

You're a pimp, nothing more.

Wed, 02/16/2011 - 23:26 | 969030 Burnbright
Burnbright's picture

insert "value" with "price" problem solved.


Wed, 02/16/2011 - 23:50 | 969057 william the bastard
william the bastard's picture

Your koolade cherry?

Thu, 02/17/2011 - 00:12 | 969132 tmosley
tmosley's picture

You need a new bib.  This one is full.

Thu, 02/17/2011 - 01:00 | 969261 william the bastard
william the bastard's picture

What Chu Talkin Bout Willis!!

Wed, 02/16/2011 - 23:59 | 969111 sellstop
sellstop's picture

But they do have physical. These arguments are old. If you conspiracy theory nuts convince GLD holders to sell, you shoot yourselves in the foot.

Fact is, they hold the physical. And it can get sold at the click of a mouse. That is what scares you. Knowing you are in bed with a bunch of white shirt and tie wearing, office dwelling city folks that may decide to sell your precious metal before Armageddon arrives.



Thu, 02/17/2011 - 00:23 | 969159 Bay of Pigs
Bay of Pigs's picture

Wrong. Try to get your facts straight before you attempt to bullshit a crowd that knows way more than you sonny boy. 

Thu, 02/17/2011 - 00:22 | 969160 tmosley
tmosley's picture

Pfft, whatever.  Yeah, like a million people just "decide" to sell GLD and SLV all at once without proof one way or another.  That the dumbest thing I've heard in the last five seconds (sorry, Dim Willy above is hard to beat).  

Either they have the physical, and no-one sells, because its safe, or they don't have the physical, and GLD implodes along with the entire gold and silver complex, and you and Dim Willy fight to the death for a position on my septic system cleaning crew.

But hey, don't think that I want you to buy gold or silver.  I couldn't care less what you, or any of the other people here do.  I just tell the truth.  Believe it or not, and you'll get what you deserve. 

Thu, 02/17/2011 - 00:39 | 969206 SilverIsKing
SilverIsKing's picture

Morons abound so I suggest ignoring them.  When the sheeple discover the ETF fraud, they might dump the ETFs but that money is going to ricochet right into physical which will be unavailable.  Paper prices won't be relevant then.

Thu, 02/17/2011 - 01:02 | 969265 william the bastard
william the bastard's picture

You stressing about someone selling what you proport to hold for a hundred years? You ain't man enough for this gig Wainwright! 

Thu, 02/17/2011 - 01:28 | 969309 SilverIsKing
SilverIsKing's picture

Who you callin Wainwright?

Thu, 02/17/2011 - 00:54 | 969207 SilverIsKing
SilverIsKing's picture

(duplicate post deleted)

Wed, 02/16/2011 - 19:46 | 968409 NotApplicable
NotApplicable's picture

Umm... as soon as the ETF's are exposed as having no physical, they will go no bid, while physical goes parabolic.

Increasing scarcity means increasing prices for physical.

Wed, 02/16/2011 - 20:15 | 968495 william the bastard
william the bastard's picture

Pay the offer. It's the bubble way.

Hurry!! Supplies won't last!!!

"Operators" are standing by.



Wed, 02/16/2011 - 20:22 | 968509 unwashedmass
unwashedmass's picture

there's HL, EXK and CDE as well.

Wed, 02/16/2011 - 20:28 | 968536 william the bastard
william the bastard's picture

SIL, the ETF, boasts the inclusion of 30+ silver miners. There's a shortage especially as to Canadian listings.

Thu, 02/17/2011 - 04:16 | 969458 minus dog
minus dog's picture

"Umm... as soon as the ETF's are exposed as having no physical"

Or as soon as that instrument on paper becomes inaccessible for any near-term transaction due to government shenannigans...

Thu, 02/17/2011 - 07:51 | 969544 johnQpublic
johnQpublic's picture

heres my take on all this...

in late '08 when silver was 8 bucks, you could buy all the paper silver you wanted

you could get it thru major sources, if you were willing to wait six weeks for delivery


but on ebay, it was going for close to 25 an ounce

thats where the rubber hits the road

people wanted physical right damn now, and were willing to pay a premium to get it

right now on ebay, it goes around spot or there abouts

you can buy below spot on craigslist if you search hard enuf

i could see the bottom fall out of paper silver, while at the same time tripling in price for physical, right now type delivery

when i can contact a redneck from Dover delaware, and they shoot the word contango back at me, even if improperly used, i'm a buyer to 70/oz   (he said cotango, but dammit,close enuf)

all the way up, all the way down

people selling right now around here need heating oil....this wont last much longer(spring is in the air)

people get what is going on to some extent, but they dont know what to do about it

poor mans gold folks

straight to the moon alice,straight to the moon

Wed, 02/16/2011 - 19:47 | 968412 JonNadler
JonNadler's picture

that's shameless even for me. Sell SLV and physical goes down? To terrify the gold bugs the statement has to have some plausability to it.

Wed, 02/16/2011 - 21:08 | 968663 Temporalist
Temporalist's picture

Don't you know SLV is more valuable than silver?

Wed, 02/16/2011 - 22:57 | 968956 Bay of Pigs
Bay of Pigs's picture

Jon, Please get your li'l protege here sellstop up to speed. He's confused.

Wed, 02/16/2011 - 19:53 | 968434 Pladizow
Pladizow's picture

To: sellstop

I think your reasoning may be flawed.

If the reason the SLV shares get sold is because it is discovered they are commiting fraud, I doubt it will have a negative impact on physical.

Perhaps even the opposite.

Thu, 02/17/2011 - 00:11 | 969131 sellstop
sellstop's picture

See my other reply.

SLV does hold physical. It can be sold at the click of a mouse. The problem from the "physical" holders point of view is not that the ETF's don't have the metal, the problem is that they do! And it can be so easily bought and sold. The volatility is increased in anything that can be instantly and widespreadily (?) bought and sold. Especially when the "little guys" get in on the act. And that was the whole point of ETF's. To make physical available to everybody.

so be careful what you wish for.

And for your information, I own paper silver, and physical silver. The timeframe of the two holdings is very different because I recognize the volatility and can vary my bet size depending on conditions more easily with the paper. The physical is for that worst case, and long term scenario that may or may not happen. But that is what my 26 acres, cattle, garden, shop, gravity feed water, and wood heat is for. Besides the quality of life......

Best of luck,

Know yourself.


Thu, 02/17/2011 - 01:06 | 969273 nope-1004
nope-1004's picture

I recognize the volatility and can vary my bet size

That's exactly the casino mentality that physical holders don't buy into.  All you "brokers" huddled in your cubicles staring at a computer screen placing bets on pokerstars and futures markets doesn't "scare the hell outta me", it makes me realize how disconnected from reality you paper pushing criminals are.

But don't buy physical.  I suggest you keep your ways, place your bets, and keep anti-ing up to stay afloat.  When it crashes, I'll have my burger without onions, please.


Thu, 02/17/2011 - 01:11 | 969281 MsCreant
MsCreant's picture

Why is the Comex settling in cash instead of delivering silver?

Thu, 02/17/2011 - 18:53 | 972087 nope-1004
nope-1004's picture

They are bribing the hedgies and offering as much as 30% (by some accounts) premium to spot.

Thu, 02/17/2011 - 02:24 | 969361 Ahmeexnal
Ahmeexnal's picture

Your 26 acres, cattle, garden, shop, gravity feed water, wood heat, flux capacitor and your quality of life will be taxed to death when TSHTF. Good luck trying to move your 26 acres. Remember Rome. Remember Zimbabwe. You have been scrood, just like everyone else.

Strike hard, strike first, strike the head. Or get down on 20 nails and pray 5 times a day towards anywhere the power elite tell you to.

Wed, 02/16/2011 - 20:45 | 968591 SRV - ES339
SRV - ES339's picture

Well... if you're going to be wrong, you may as well go "all in!"

You better stick to mutual funds.

Wed, 02/16/2011 - 20:47 | 968600 SRV - ES339
SRV - ES339's picture

Well, if you're going to be wrong, you might as well go "all in!"

You better stick to mutual funds.

Wed, 02/16/2011 - 20:48 | 968607 sleestak
sleestak's picture

sellstop, wtf? the people who own SLV today do so in hopes that this paper vehicle will gain them exposure to the actual price of physical silver, yes? once aware the counterparty trusted to maintain this link has defrauded them, yes, they will sell. however, their initial reason for being attracted to silver (supply demand imbalance, fiat profligacy, etc.) will persist, only they and their ilk will have fewer vehicles with which to play it. supply is essentially further reduced.  holding demand static (or increasing it in a newly aware panic at the extent to which the fiat ponzi is willing to go to prevail), while reducing supply = price increase. 

or did you have some other logic that made sense to you?

Thu, 02/17/2011 - 00:15 | 969144 sellstop
sellstop's picture

WTF! You believe rumors about fraud and base your investment decisions on conspiracy theories.


Fri, 02/18/2011 - 03:53 | 969412 GoinFawr
GoinFawr's picture

'Rumours', hunh....pending lawsuits aside?

What about all the outflows of actual real silver from SLV as of late, even as spot increases and the futures go into steeper and steeper backwardation? Remind me again who runs that particular 'license to shoot myself in the face' ETF?

 It may be time to upgrade that 'conspiracy theory', IMHO. But fill your boots with long ZSL, if you're so damn certain, paperbuoy.

Fri, 02/18/2011 - 20:50 | 976225 sleestak
sleestak's picture

sellstop, wtf, again?  nowhere in my post did i suggest an investment thesis.  i made the case that a fraud at SLV would send the price of physical silver higher. can you really dispute that?  or are you just mad that i disagree with you and so i must have some inane investment thesis based on rumors?

do you know what i own?

know yourself? please.

get a grip.



Wed, 02/16/2011 - 21:47 | 968764 Quinvarius
Quinvarius's picture

If SLV defaulted silver would be over 50 in about an hour.

Wed, 02/16/2011 - 22:16 | 968847 UncleFester
UncleFester's picture

More like 10.2 seconds.

Wed, 02/16/2011 - 23:22 | 969017 JLee2027
JLee2027's picture

Silver is money, paper is not. Once the public remembers that, the demand will be virtually infinite and so will the price.

Thu, 02/17/2011 - 00:02 | 969116 UncleFester
UncleFester's picture

I'm not sure about infinite, but I get your point.

Thu, 02/17/2011 - 04:57 | 969482 Overflow-admin
Overflow-admin's picture

I think it's more accurate to say silver has a value much higher than paper.


Money is what your country accept for paying taxes. It could be anything (shellfish, gold, tally sticks, paper, et.). Money is a wealth vehicle.

Wed, 02/16/2011 - 22:16 | 968845 Bagbalm
Bagbalm's picture

Yeah if the physical is not backed by paper I'll just throw it in the street. You work for JPM or are you drunk?

Wed, 02/16/2011 - 22:34 | 968886 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture


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